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SEPTEMBER 2002 SELLING STOCK
Volume 13, Number 1
©2002 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, 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, fax 301-309-0941, e-mail: jim@chd.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
Tough times don't last, but tough people do.
GETTY ACCOUNTING PROBLEMS
EyeWire Contributors Get Windfall
July 11, 2002 - (Story 455) - EyeWire contributors recently began receiving huge windfall
royalty payments from Getty Images -- up to 20 times their normal average monthly payments -- as
a result of an internal audit by Getty.
EyeWire had developed a line of Royalty Free products with images supplied by photographers and
stock agencies. This company was sold to Getty Images in August, 1999. It appears that the
royalties of all the EyeWire suppliers were affected. Also sold on the EyeWire site were images
of other Royalty Free brands such as Digital Vision, Rubberball, Hollingsworth Studios, Artville,
Birch Design Studios, Cartesia, Image Club, etc. and there is evidence that at least some of the
royalties owed these companies had not been paid as well.
Given the size of the payments the accounting errors may go back to when Getty first purchased
EyeWire. Some of the individuals and organizations have not supplied new images to the EyeWire
product line for several years. There is no evidence that any of this had anything to do with
EyeWire's original management of the brand. All indications are that it is solely a problem with
Getty's tracking and accounting systems. One supplier was told that the problem occurred at "one
of our call centers."
Getty should be given credit for making these payments for back royalties owed as soon as the
error was discovered. Sources at Getty claim that the audit of EyeWire records is now complete
and say that all problems have been discovered and the suppliers notified of what they are owed.
These same Getty sources also indicated that all monies due had been paid in May, but some of the
suppliers we checked with have received notice of what they are owed, but no money as of early
July.
Getty has refused to explain to Selling Stock how such discrepancies could have occurred arguing
that this would be "selective disclosure" which is prohibited by the SEC. Getty also claims that
I (Jim Pickerell) have a conflict-of-interest in questioning them about accounting irregularities
as I am currently an expert witness in the case of Penny Gentieu vs. Getty Images which deals
with an alleged series of totally unrelated accounting irregularities.
What Caused The Problem?
In letters to contributors Getty has tried to claim that the problems stem from the integration
of sales data from their old legacy accounting systems into their new Oracle based "Alliant"
accounting software. Getty has been integrating data from approximately 20 different systems into
Alliant, the EyeWire system being only one of them.
Getty first started uploading data to the Alliant system in the summer of 2001 and has been
having major problems with royalty payments ever since. We first reported on problems with the
VCG brands in December 2001 (See story 446).
When Getty acquired EyeWire in August 1999, they did an immediate data dump of all the images
onto the Gettyone.com site. It appears the foreign distributors were also told to start paying
the royalties directly to Getty. Getty also continued to operate the EyeWire.com site in Calgary,
Canada. Thus, essentially, there were three sources of revenue from the EyeWire images -- the
EyeWire.com site, the Gettyone.com site and foreign distributors.
The EyeWire.com site was physically located in Calgary until November 2001, and continued to be
operated, for the most part, by the people who had founded and built EyeWire. Royalties generated
by sales from this site continued to be paid to contributors by the Calgary operation, just as
had been the case before Getty took over.
Getty has acknowledged in letters to contributors that royalty payments for some sales were not
passed through to rights holders in a timely manner. These sales were made both on Gettyone and
by the foreign distributors. These were under the control of Getty's accounting operation in
Seattle.
In November 2001 the Calgary operation was closed down and all digital files and data were
transferred to Seattle. At that point the Calgary accounting records were uploaded into Getty's
new Alliant system.
Spotting The Problem
Contributors have been saying for some time that their Eyewire sales were falling off. Many
concluded that this drop resulted from a combination of a reduction in advertising, the heavy
discounting of images sold through GettyWo1111rks, and the use of a subscription sales strategy.
Getty stopped aggressively promoting the EyeWire.com site after they took over. Their goal at
that time seemed to have been to move all future sales to the Gettyone site, and the new
Gettyworks brand they created. The exact dates of these moves are unclear, but this was the
general trend of what they were doing.
Given the above explanations for why sales were falling, and since they were still receiving
regular monthly reports and checks, contributors assumed they were being paid everything they
were owed.
Dimensions of the Problem
Getty has been unwilling to explain how this problem developed, or how widespread it is. All
they will say is that it involves a "small" number of contributors and a "small" amount of money.
Small is a relative term. Because of the way EyeWire, a RF company operated, the number of
contributors may be small, but each one had significant numbers of images involved. Millions of
dollars could be considered small, if we compare it to Getty's total revenue of $451 million in
2001.
I estimate that the total monthly royalties EyeWire should have been paying to all contributors
should have been in the range of $150,000 to $200,000. Since some of those who are receiving
payments are getting about 20 times their average monthly royalty the total of the back royalties
owed could be between $3 and $4 million, if all rights holders were proportionally affected. On
the other hand we have found at least one rights holder who was only owed a small amount of
money. It is unclear what kind of systems error could have affected the sales of some rights
holders in a major way and others very minimally.
At first, sources at Getty tried to claim that all the problems arose as a result of the
integration into the Alliant system, and thus they would have begun after November 2001. If this
were the case, and given the size of some of the payments, Getty's total EyeWire sales would have
had to jump 200% to 300% in the last eight months and we believe this was not the case.
Given that EyeWire contributors were receiving some royalties all along, the source of the
missing revenue must go back at least a year-and-a-half, if not much further. This means that the
problem had to be in Getty's original accounting methods long before the Alliant system was
introduced.
It is unclear how such a large amount of royalties could be overlooked for so long a time. In
the accrual accounting system whenever cash, or any kind of payment, is received and credited as
revenue a debit must also be automatically entered to reflect a "cost of sales". That "cost of
sales" should be automatically credited to the photographer's account. For some reason it appears
this didn't happen in a huge number of individual sales. In countless talks with photographers
people from Getty have insisted that this kind of thing couldn't happen - that the photographer's
account would always be credited the instant a sale was booked, or any money was collected.
The other possible explanation is that somehow this money was never recognized as revenue. This
is not suppose to happen either. And given that Getty is always looking for every possible way to
show that revenue is increasing, it is hard to imagine that they would have money in the bank
that they were not reporting. Not to mention that this would be illegal.
We suspect that some of these payments were made by credit card because many of the EyeWire
sales are for small amounts of money and to small users. It is not easy to explain how credit
card sales could be made and not claimed as revenue.
While the indications to date are that this problem is only with the EyeWire brand, we don't
know enough to determine whether there has been some fundamental flaw in their accounting system
that will lead to the same kind of errors showing up in the other brands once they are audited.
EyeWire contributors were asked in letters from Getty to, "please accept our assurance that
these problems are not expected to recur." Such problems were not expected to happen in the first
place and without some explanation as to what really happened the "assurance" is not very
comforting.
Why It Was Discovered Now
The accounting department has been fully occupied in dealing with the Alliant integration
problems for almost a year. Their first concern was to get current on all royalty payments and
that has taken almost a year. Until recently they had little time to go back and audit their
systems. According to Roger Ressmeyer, "Auditing is accelerating now that royalty statements are
back on schedule. Getty is committed to auditing all the brands and hopes to have the work
finished by mid-August." At worst they expect it could take three or four months to do a total
audit of the system.
Good News
One element of good news for the EyeWire contributors is that it now appears that sales for
their products -- many of them created three or more years ago -- are still strong and have not
been falling off as they had feared.
Also Getty has indicated that they are now listening carefully to photographers who spot things
on their sales reports that they think might be a inaccurate. They are taking detailed comments
and investigating each allegation. Ressmeyer said, "When the photographers provide us with the
details we investigate and fix any problems we find. We are committed to correcting and
straightening things out the instant we become aware of the problem." Photographers who have felt
that their complaints weren't listened to in the past may find Getty more responsive now.
INTEGRATION
August 3, 2002 (Story 495) - One of the big problems in building a business by
acquisition is that eventually integration of the smaller entities into a single unified
operation is necessary. In the stock photo industry many companies have grown by acquiring lots
of smaller companies. They now face the problem of turning these companies with unique
characteristics into a single unified business.
Such problems are not unique to the stock photo industry. Managers of companies in other
industries -- both acquiring companies and those that were acquired -- report that there are
almost always serious problems with integration. It never goes smoothly.
In the stock photo industry there are lots of levels of integration. There are new editors and
new contact people for the photographers. There is a reorganization of sales positions and
customers discovering that they are either assigned a new sales person, or that a team of people
is handling their account and they never know who to talk to. Often the personal service that
customers received from smaller companies is lost.
There are accounting problems. Getty Images has been trying for more than a year to integrate
the accounting of approximately 20 different brands, each with its own unique accounting system
into one unified system called Alliant. It still hasn't got all the bugs out. One might think
that with computers this shouldn't be that hard, but that appears not to be the case.
In theory, there is income from licensing an image. Each image is owned by a photographer and a
percentage of the sale should be paid to that photographer. Seems simple.
But each company has a different way of recording information. Each company may have a different
way of numbering and tracking images. In transferring the data from one piece of software with a
column called "Sales" to another piece of software with a new column called "Gross Sale" often
something tends to awry.
Some clients are billed for every sale, others are billed monthly. Some get volume discounts
that have to be figured separately. The larger and more sophisticated the sales staff the more
variations they develop on the standard deal. This adds additional levels of complexity for the
accounting department.
Percentages may vary from photographer to photographer. In some cases one photographer may have
more than one percentage arrangement for different pictures, or different productions. Some
photographers use pseudonym's so the person credited for the use of the image is not the person
who is supposed to receive the check. There are different methods of payment. Some photographers
get checks, other get direct transfers to their bank accounts.
We also hear from some customers of the larger agencies that they don't get billed in a timely
manner for the images they purchase. These customers want to pay their bills so they can close
their books on the particular project but sometimes, despite applying a lot of pressure, they
can't get invoiced.
The people doing the accounting at most agencies have been there for years. They understand the
exceptions and how they need to be handled. In acquisition situations often many of the
accounting staff from the acquired company either leave or are let go because their jobs seemed
to be redundant. Often "institutional memory" of the intricacies of how certain types of sales
should be handled are lost when these people disappear.
It also appears that in some cases when people leave they don't explain, or document, all the
intricacies of how the old system worked. Problems can go unnoticed for a long time if careful
and detailed audits are not carried out with each new change in the system.
Where Does This Leave Photographers?
Photographers may not be getting paid all they are owed, but they have almost no way to
determine what the correct amount might be. Even when problems can be identified, a fix is not
always quick or easy. Photographers make future production decisions based on the revenue they
receive. If that figure is inaccurate or undependable the photographer's decisions are based on
faulty data.
Getty Payment Problems
Getty has been struggling to get their photographer payment systems organized since the middle
of 2001 when they introduced their Alliant software that was supposed to unify more than 20
different accounting systems. In some cases photographers receive two and three checks a month as
Getty tries to get the systems straightened out. This is particularly true for photographers from
the VCG brands who seem to be having the most problems. In many cases Getty has frankly admitted
that they don't know how much the owe the photographers. In desperation some of the top producing
photographers have negotiated a fixed monthly draw based on what they were earning a couple years
while Getty tries to figure out what they are really owed.
Photographers with the Stone brand are probably experiencing few if any problems because Alliant
is based on the old Stone system and the idea is to conform the systems of all the other brands
to what Stone was doing.
Recently, photographers who produced images for EyeWire have received huge checks as a result of
an internal audit. These checks indicate that the photographers have been grossly underpaid for
many months, if not years. This presents major problems for the photographers on several levels.
First, income has been withheld that the photographers needed and were entitled to. Their new
production was restricted for lack of capital to plow into it. In addition, in this case, the
photographers made decisions about the viability of the RF market, based on declining revenue
they were seeing in their monthly checks. It appears now that these decision were invalid and
that the photographers should have been producing more aggressively, but now a year or two of
productivity has been lost.
Assuming that the whole thing gets straightened out after further audits, and all back payments,
plus interest, are paid that really doesn't make up for the disruption in people's lives and
businesses that the integration has caused.
There is no indication that any of this was intentional on Getty's part, but so far all the
errors have worked to Getty's advantage by allowing them to retain cash longer. There have been
no indications to date that any of the audits have uncovered situation where Getty has overpaid
the photographers.
The problems at Getty may be more transparent because of the information they are required to
disclose as a publicly traded company. At least everyone involved has some idea of Getty's gross
revenues, and can gage their individual returns against that standard.
Corbis
With Corbis there are strong reasons to be suspicious about their accounting as well,
particularly with Corbis Stock Market, but there is no publicly available figures that might shed
any light on these speculations.
Sales for Corbis Stock Market have dropped dramatically since Corbis took over The Stock Market
in late 2000. Some photographers report their sales are down 70% to 80% from their previous
levels. Others are down only 40%. No CSM photographer that we have encountered is earning
anywhere near what they were earning when Richard Steedman was operating the company.
Meanwhile, photographers who have had contracts with Corbis for five year or more, and who deal
with the parent company report that their sales are rising.
Sources at Corbis insist that their overall sales are still strong and that they have not seen
the sales decline that has affected so many other U.S. companies in the industry. Yet, when
Corbis took over TSM in late 2000 we believe that the TSM sales represented approximately 30% of
their business. Given the royalties that are currently being paid to TSM (CSM) photographers it
is hard to imagine that the revenues from the rest of Corbis' business have increased enough to
make up this difference.
Add to this that CSM has had three different accounting managers in the last 14 months.
Photographers receive statements and checks where the check numbers and amounts don't match. The
closing dates for the monthly accounts keep changing. All these factors are indicative of
problems with the accounting systems.
There are non-accounting factors that could explain some of the falloff in CSM sales. There has
been less promotion of the CSM brand than there was before. There were problems when customers
were assigned to new sales representatives. Corbis stopped doing the kind of file research that
was done before. And Corbis staff is quick to blame the CSM photographers for not supplying
enough new images.
But then as one CSM photographer who is represented by a number of other agencies points out,
none of his other agencies are showing the kind of decrease in sales that CSM has shown.
Meanwhile the situation for many photographers is desperate. They can't afford to do new
expensive productions when their income is falling so dramatically. Some major producers have
left Corbis and others are considering it. One major producer used to have a staff of 9. He is
now down to three and may have to let some of them go. Another is considering selling his studio.
A third has sold his home and moved to Brazil where he can live less expensively on the meager
income he receives from Corbis.
Audit
Some photographers are talking Audit, but to force an audit from the outside seems unlikely to
happen, and probably not very useful. While the photographer's contacts allow them to audit, a
simple review of all the records that are connected to any given photographer's account will not
be enough to uncover the problems.
The majority of errors probably occur when a portion of the gross revenue from the sale of an
image is assigned to a particular photographer's account. If for some reason it is not assigned
correctly there will be no evidence in the photographer reporting system that such a sale was
ever made.
The auditor must to go back to the records created when images were originally licensed and
track the process through for each record to make sure that the portion owed the photographer was
properly credited and paid to someone. What appears to have happened with Getty in the EyeWire
situation is that in some cases the information got credited properly and in other cases it
didn't. No one has explained how that could happen. Such bugs or glitches are common in software
and the more complex the transaction the more likely they are to occur.
If there are major errors it will not be because sales were never reported, or collected, but
that somehow the software did not apportion the monies properly.
An audit for one or two photographers is useless, because it is unlikely to uncover anything.
The audit needs to be system wide. The cost, and the time involved in doing such an audit is
huge, but it is the only way to get satisfactory results. It is easy to understand why Corbis, or
any company, might be reluctant to dig in and start such a process. But, if they don't
photographers represented by a large company with a complex accounting system have little chance
of ever knowing if they are being paid all they are entitled.
PICTOR FOLDS
August 3, 2002 (Story 497) - In June Pictor LTD, headquartered in London, went into
receivership and on June 26th some of the assets were purchased by ImageState. Sources indicate
that ImageState paid something in the range of $100,000 to $200,000 for the assets they acquired.
One of the principle assets that ImageState acquired was the Pictor web site technology. They
are now in the process of moving all ImageState images to that system. The Pictor site had about
40,000 images on it when ImageState acquired it. ImageState is attempting to sign new contracts
with the photographers in order to continue to represent the digital images and the images that
are in print catalogs with sub-agents around the world.
The existing contracts are null and void as a result of the liquidation.
ImageState has offered photographers who were formerly contracted to Pictor LTD an immediate
token payment of 50% of what they were owed for any sales that were made by Pictor between March
and end of June 2002. This is conditioned on the photographer signing a new agreement that allows
ImageState to license the images that have been digitized and those in the print catalogs. It is
believed that ImageState will receive no revenue from the sales made before they took control
because that money will probably go to pay off creditors.
The first sales reports that photographers will receive for sales made under the new ImageState
management will be mailed at the end of October since ImageState pays on a quarterly basis.
In addition to all the digital files of images ImageState took possession of all the film images
that were in Pictor's London office. They are sorting the images by photographer and plan to make
them available for the photographers to pick up.
The wholly owned French and German offices of Pictor were not acquired by ImageState and they
have been closed. At this time it is uncertain what will happen to the images that remain on file
in these offices.
ImageState's takeover scuttled the fragile agreement that Stock Connection had worked out to
take over the separate United States sister company, Pictor International Inc. (Pictor INC). (For
more information see Story 480 in the July issue of Selling Stock.) That company had been in
Chapter 11 bankruptcy since May of 2001 and as of July 31st was converted to Chapter 7 which will
lead to liquidation no later that September 30, 2002. At that point all contracts will be void
for those photographers who were formerly contracted to Pictor INC.
Technically, after September 30th, the sub-agencies who currently have catalogs containing
images belonging to photographers who were contracted to Pictor INC. (mostly U.S. based
photographers) will no longer have rights to license usage to those images. Some of these
photographers are signing new agreements with ImageState, but others are exploring other ways to
marketing their images internationally in the future.
Stock Connection currently has possession of about half the film images that were on file with
Pictor INC. Arrangements have been made to store for a few months the remaining images (about
500,000) that were on file in New York. During that time provisions will be made to allow
photographers, or their representatives, to search the files for their images. Stock Connection
has sorted the approximately 400,000 Pictor images under its control and will be notifying
photographers shortly as to what they need to do to have these images returned.
Both Stock Connection and ImageState are attempting to sign new agreements with photographers to
handle their existing digital files and new production.
CREATIVE EYE FOLDS
August 31, 2002 (Story 498) - Creative Eye (CE) has announced that it will cease all
operations by the middle of September including the closing down of the www.mira.com web site.
Creative Eye is a cooperative and all activities are governed by a vote of its members. In the
middle of August member photographers were notified that an additional assessment of $750 would
be necessary to continue operations beyond October 1, 2002. Members were asked to vote prior to
August 25th and the CE board said it would "begin an orderly process to shut down" as of
September 1st if a sufficient number did not agree to the assessment.
Creative Eye was founded a little over a year ago in an attempt to save the MIRA stock photo
database that was originally developed by ASMP. Currently there are approximately 50,000 images
online in that database.
On August 27th the five man board determined that there would not be sufficient resources to
continue and moved to close down operations before the beginning of September. Later in the week
the board determined that a little more time was needed to attempt to effect a closure that might
provide some benefits for member photographers and agreed to extend the actual closure date for
an additional two weeks.
Two companies, Stock Media and Stock Connection, have made proposals to take over the marketing
of the images that are currently online. Those proposals are currently being considered by the
board and the member photographers.
CE was founded as a cooperative and received some initial organizational funding from the
National Cooperative Bank. A few months after their launch the NCB re-evaluated it's loan
portfolio and withdrew all promises of future funding.
In January 2002 CE said it had a budget of over $1 million for 2002 and a best case scenario of
revenues of $500,000 for the year. To solve this budget shortfall they asked members to purchase
preferred stock in the company at $1,000 per share.
Members pledged $180,000 but CE has only been able to actually collect $115,000 of that amount.
Members were told that if they did not agree to the new $750 assessment and pay the money
promptly their images would be withdrawn from the Creative Eye database.
CE has approximately 800 to 900 members, but only about half of these individuals have provided
any images for the MIRA database.
Currently, the average monthly image licensing revenue is in the range of $13,000 leaving CE far
short of their estimated revenues of $500,000 per year. Nevertheless, this is more than double
what the image database was generating under the previous management of the Copyright Clearance
Center.
When MIRA was originally founded almost ten years ago a decision was made to allow photographers
to post any images they wanted on the site. This quickly led to a bloating of the file. Many of
these images would be of very marginal interest to most image buyers. While there are great
images in the collection -- and most of the images added recently are very marketable -- many
image buyers have expressed the general impression of a weak offering due to lack of editing.
When CE took over they instituted an editing policy. That coupled with an improved search engine
operated by Stock Media has greatly improved the look of the site and the offering. The lack of
funding has also made it impossible for CE to promote the site in the way they had hoped.
What The Future Holds
The key question for the moment is whether photographers will be allowed to recover copies of
their scans and keywords. This would expedite the posting of these images on new sites and enable
the photographers to find new options for marketing their images with as little down time as
possible. Both Stock Connection and Stock Media are prepared to assist in this recovery.
CE has no obligation to provide the scans and keywords to the photographers, but if they choose
to do so it would provide their members with some small benefit for efforts and monies they have
expended over the years in an attempt to help MIRA and CE become viable.
It is likely that anyone who takes over any part of this operation will edit the file and that
not all the images currently online will be accepted by the new operator.
For more information on the history of Creative Eye go online to www.pickphoto.com/sso and see
our previous stories 430 and 454.
BUILDING A SEARCHABLE SITE
July 20, 2002 (Story 492) - Photographers are finding that the major agencies will no
longer accept a significant percentage of their new images. In addition some agencies are
reluctant to include in their web offering any images taken more than a year ago, even if these
images are generic and have sold in the past.
Photographers have also discovered that a huge percentage of the images they had placed with
some agencies have been removed from active marketing. In some cases the images have been
returned, but in many instances the laborious process of sorting the images so they can be
returned is progressing very slowly.
The end result is that large numbers of images photographers want to sell -- and customers want
to buy -- are no longer where the buyers can find them.
At the same time customers are using digital search to a much greater extent to find the images
they need. If an image isn't available in some type of online database there is less and less
chance that it will ever be found or used.
Solving The Problem
To solve this problem many photographers, either individually, or in small groups, are beginning
to look at building searchable web sites to make available, and easy to find, images that the
major image suppliers are rejecting.
The following are a few examples of what some photographers are doing. Highlighted in the
discussion are software and technology services solutions that may help others who are interested
get started in an inexpensive way.
Windigo Images
Mitch Kezar developed www.windigoimages.com when the agency he had been working with for years
would no longer accept for marketing many of the images that he knew customers wanted to use. He
currently represents about 40 photographers who specialize in hunting, fishing and outdoor
photography and has about 65,000 images on the windigo site. Given the relatively narrow focus of
the subject matter and the huge number of images that are on the site there are a lot of very
similar images on many subjects -- much as one might find on these subjects in a traditional film
file.
While large agencies are not willing to put this type of depth of coverage into their databases,
Kezar has found that this is what his specialist customers want and why they keep returning to
him.
Windigo offers custom research of their database, and many of the busy art directors who don't
want to take the time to search through the entire file will avail themselves of this service.
The Windigo researcher creates a light box customized to the customer's specific requirements
allowing the customer to review a tightly selected sample of the images on the site in this
subject area.
Windigo has noticed that as customers get more comfortable with online search many of their
advertising customers who originally used the research service to save time, are now doing their
own research and simply ordering specific images. This is significant since the number of
variations the customer must look through has grown since they first started using the site.
There is no automatic pricing or automatic delivery with this site. The large digital files are
stored off line on DVD discs. When a customer calls and orders an image the file is manually
pulled off the DVD and delivered to the customer by FTP (File Transfer Protocol). When the site
was launched initially only about 5% of Windigo's customers were willing to accept digital files,
but there has been very rapid acceptance of the digital files and now over 95% of their revenue
comes from files that are delivered digitally.
New images are now scanned to 60MB using the Nikon Super Coolscan 4000 ED scanner and the
Digital ICE feature. They do basic clean up of the images, but the files are not sharpened or
color balanced. Those tasks are left to the customers. Windigo has four Nikon scanners with stack
loaders working. Much of the scanning is done overnight when otherwise the computers would be
idle.
Initially most of the images on the site were scanned low res so Windigo could build a database
quickly. When an images that has only been scanned low res is requested, the staff
scans-on-demand to supply the customer's needs. The fact that large files are not instantly
available has not been a problem in making sales.
Given the early loose editing the scan-on-demand strategy was particularly important in order to
keep scanning costs under control. Kezar recognizes that a large percentage of the images in the
file will never sell, but in over 30 years in the business he has found that there was no way of
predicting which ones will eventually sell and which ones won't. There is little point in paying
for large scans of images that no one will ever want to use.
However, now as Windigo is taking in images from more photographers the editing is somewhat
tighter and Kezar is scanning everything to high res. Part of the reason for scanning all new
images at 60MB is so the original film can be returned to the photographer limiting Windigo's
costs and liability in storing film.
The basic search engine driving this site is the Hindsight searchLynx software which was
developed by photographer Jim Cook. This search engine require the Hindsight StockView software
as a source of the original data, but the total price of these two programs together is only
$890.
Some of the other web sites that use searchLynx are:
http://doctorstock.com
http://newyorkstockphoto.com
http://www.stockphotos.tomtill.com
http://www.photoresourcehawaii.com
http://www.imagesofnaturestock.com
As you view these sites you'll note that the interfaces are quite different. Your probably want
to have a customized design that fits the style of your particular company. That will be an
additional cost. The Hindsight software is designed to allow a lot of customization. Kezar used
John Hillis at http://www.Omnera.com to design his page. For more information about searchLynx
you can go to http://www.hindsightltd.com. A manual is available as a PDF download to explain in
detail more about what is possible with this software. The manual is available at:
http://hsltd.us/reference/documentation.html.
Independent Photography Network
An option that may be particularly useful for editorial photographers is the Independent
Photography Network (IPN) founded by Jose Azel of Aurora&Quanta agency. The software was
originally developed by Azel for use by his agency. The Independent Photography Network gives
photographers the option of having their own site, which shows only their images and which they
can promote directly to their customers. Many of the photographer's images will also be made
available to customers of Aurora&Quanta and thus the photographer benefits from Aurora&Quanta's
direct promotion.
IPN is unlike most other portals. It's business model blends the technology provider role with a
sales and distribution channel model. Individuals members license the software and manage their
own web sites with regard to image upload, price negotiations and collections for sales.
The only way into the software is through a members web site. There is no direct entry to the
IPN network at this time. If the client does not find something they want within a specific site
such as www.carywolinsky.com, the customer has the option to see the total search results of all
participating IPN members. Thus the client is not disappointed when they get a null search result
from a particular photographer's web site.
In the event that a customer eventually finds an image they want to use that belongs to a
photographer other than the one whose portal they entered that sale will be negotiated by the
Aurora team (the network) and by contract the network takes 30% of the negotiated fee for their
services on these sales.
Currently there are 17 photographers that have web sites connected to the Independent
Photographers Network and a total of about 30,000 images. Some of the sites you might want to
review are:
www.carywolinsky.com
www.edkashistock.com
www.norbertwustock.com
www.yamashitastock.com
www.jaydickman.com
There is a licensing fee of $195 per month for the hosting and storage of a photographer's
individual web site running the IPN software. Storage of up to 500 high resolution images is
included in this price. An additional 1000 images costs approximately $35 more per month. Hi-res
is defined as a 40 meg files, which compresses to about 5MB's as a jpeg.
The general quality of a photographer's work must be approved before the photographer is allowed
to join the IPN network. After that there is normally no restrictions or editing of the images
that the photographer places on the site. However, to control quality, the network does reserve
the right to edit. The network staff reviews work placed on the site and advises the photographer
if they think he or she is putting too many similar images on the site, or if there are other
issues that need attention.
IPN does not make money on their software licensing and hosting fee. Their investment and the
photographer's investment only pays off if there are image sales. IPN receives 15% if the image
is found on the photographer's site and 30% if it comes from the IPN network. They also make some
of the photos photographers supply available through the Auroraphotos.com site. In this way
photographers can benefit from Aurora's own direct marketing.
They want and expect photographers to use the site as a primary marketing and sales vehicle and
their feature set (administrative tools) makes this easy.
Peter Dean's Site
Another example is Peter Dean's agripicture.com site. Peter specializes in agricultural
photography and he supplied us with an article published in February (Story 464) explaining how
he built his http://www.agripicture.com. This story gives a good outline of the kind of revenue
that can be generated from a category searchable site of less than 1,000 images when your subject
matter fits a specialist niche and there is also a specialist clientele interested in this type
of image. Collini Design at http://www.collinidesign.com developed the search engine for Dean.
Capture
At a somewhat higher level Capture in the United Kingdom offers a full featured search and
delivery system that provides both keyword and category searching and advanced search on field
combinations. It has unlimited multiple lightboxes, the capability of e-mailing a light box,
viewing of up to 60 thumbnails at a time and low res downloads as part of the basic package that
starts at about $5,000.
Other features such as pricing and licensing, full e-commerce, rights control to prevent images
from being viewed in selected territories, high res downloads, search for images from a printed
catalog, and invisible fingerprinting of images can be had for an additional fee.
For more information about their services go to http://www.capture.co.uk. To view a site using
this system go to www.travel-ink.co.uk.
Capture also provides a web hosting services for about $425 per month.