September 2004 Selling Stock

Posted on 9/6/2004 by Jim Pickerell | Printable Version | Comments (0)



Volume 15, Number 1

(c)2004 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: All rights
are reserved and no information contained herein may be reproduced 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 DiFrank of Negotiating Stock Photo Prices, a guide to pricing stock photo usages.

Thought For The Month

"Creativity is allowing yourself to make mistakes. Art is knowing which ones to keep."

Scott Adams


August 10, 2004 (Story 656) - The London Financial Times has reported that the 3i, private equity group, has selected LongAcre, a corporate finance boutique, to undertake a strategic review of the company to consider a sale.

Under the headline "Corbis and Getty set to battle for Zefa library" the article argues that these two companies are "expected to lock horns in the battle for Zefa."

In 1998 3i provided Erwin Fey, the majority and controlling shareholder of Zefa, with about $7.4 million in investment capital to grow Zefa. Zefa's sales have quadrupled since then to about $43 million in annual sales. Part of the quadrupling resulted from the acquisition of Benelux Press and some smaller companies, and 3i added additional funds at that time, but still has a minority interest.

The Financial Times article estimated that the company might be worth two and a half times annual sales, or in the range of $110 million. Part of this valuation appears to be based on the recent acquisitions by JupiterMedia of Comstock and ThinkStock. However, this does not take into account that Jupiter bought wholly owned content, not licenses with photographers where the photographer receives a large royalty on each sale, as is the case with most of the Zefa content. Thus, it seems unlikely that Zefa, or any other similarly structured agency, would sell for anything near two times annual sales in today's market, and certainly not more.

As a normal process when a private equity group like 3i makes an investment of this nature they look to "substantially increase the value of (their) portfolio companies and then realize this value" in about five or six years. Erwin Fey says, "This was understood from the beginning, and six years has now passed."

Fey continued, "3i wants to determine the value of their stake and clear their investment, but no decision has been made at this time on the best way to accomplish this and nothing has been offered to anyone."

Fey believes the company is in good shape, strong in the market. He would like to continue in the business and does not plan to sell his shares. A variety of options are being explored including 3i selling its stake to other minority investors, an IPO, etc. The process of determining the best course of action is likely to take several months.

Is A Purchase By Getty Or Corbis Likely?

Clearly, from the thrust of the Financial Times article which notes Getty's $400 million in cash, 3i would like to see a bidding war like the one that took place when Getty Images acquired Visual Communications Group in early 2000. At that time Getty bid much more than Corbis was willing to offer. Most observers believe they did it more to keep VCG out of Corbis' hands rather than believing the company was worth what they paid for it.

However, there are several issues that make it highly unlikely that Getty or Corbis would make an offer for Zefa.

  • First, neither Getty nor Corbis would want a part ownership stake in a company they do not totally control. As long as Fey wants to continue to operate Zefa as a separate, independent organization there is nothing in the deal that is likely to interest Getty or Corbis.

  • Secondly, Getty already controls a substantial portion of the European market and the European Union is tougher on anti trust issues than the U.S. government. If Getty tried to buy its major competitor the EU would likely see it as an effort to eliminate competition. Zefa is certainly number 2 if not number 1 in Germany, and is probably number 2 throughout Europe, ahead of Corbis.

  • Even if anti trust were not an issue, and all of Zefa was available for sale, it is questionable as to what Getty would get by acquiring it. Getty needs to expand its customer base in Germany and other parts of Europe, but they already know who most of Zefa's customers are and are marketing heavily to those people. And yet, for some reason, those customers are buying Zefa images instead of Getty's.

    Part of the reason may be that Zefa has better content for that market than Getty, but I believe a bigger reason is the customers want a variety of photo sources to choose from and Zefa provides them with that variety, plus good customer service. German buyers also like to deal with German companies whenever possible. If Getty were to own Zefa, and totally integrate it into their existing sales and marketing operation, many Zefa customers would look hard to find other options. Granted, at that point the choices might be so slim that they would be forced to go to Getty, like it or not, but that's why the anti trust issue is so large.

  • Finally, many of Zefa's most productive image suppliers have left brands now part of Getty or Corbis in order to join Zefa. They made these moves because they were dissatisfied with how they were being treated at their former agencies. An acquisition by either of these companies is likely to create the same type of photographer relations problems that both companies struggled with a couple of years ago. Both Getty and Corbis are happy to have these problems behind them and would not look forward to struggling with the same issues and people again.

All told it seems very unlikely that Getty or Corbis will take over any part of Zefa.


August 16, 2004 (Story 657) - In July, amana (parent company of Photonica), and the largest photography company in Japan, floated an IPO on the Tokyo "Mothers" market for a minority percentage of the company stock. This is normal practice for a Japanese IPO, where the objective is less about raising huge amounts of cash at first, and more about progressively enhancing the status of the company. Over the years, a successful public company will traverse a step-by-step process of status enhancement through the different stages of the market. Along the way, access to better funding becomes available to the company, and more of the company stock is floated incrementally. The amana group is made up of the parent company, amana Inc., and a plethora of subsidiaries in Japan and the West.

The company has 1,216,200 shares outstanding and 485,000 shares of stock were offered at JPY 23,000 per share in this sale. This means that they raised something in the range of $100 million US for about 38.88% of the company that is now in public hands. The shares are currently being traded on the Tokyo Stock Exchange "Mothers" market at about JPY 41,850 (price as on 13th July 2004). By multiplying this current share price by the total number of shares we get a value for the company of about JPY 50,897,970,000 which is around $460 million at an exchange rate of 110 yen to the dollar.

The consolidated revenue for the two previous years is as follows:


Japanese Yen   

Approx. US $   







About half of amana's revenue in 2002 was generated from a visual content production business (assignments) for Japanese advertising customers. amana provides a whole range of solution services, and not only shoots the photographs, but also carries out art direction, all support activities and extensive post production digital work and computer graphics. It's a true full service business where amana can create almost any visual depiction a client can imagine.

The amana digital division often sits in the driving seat in creating ads and in certain cases, images are created on screen with art-direction taking place there and either stock or assigned shoots brought in as components. While all these services might be considered part of a "photographic budget" in Western terms, the degree of creative freedom available to the client in getting anything they can imagine [and indeed plenty beyond their imagination] all under one roof, doesn't exist here in the West. This division averages around 550 orders per month and based on 2003 revenue that would mean that the average sales is worth about $4,400 but some have gone as high as JPY 7 million which is over $60,000.

It is important to understand this distinction because this portion of the amana revenue is not comparable with stock agency revenue anywhere else in the world.
The breakdown between stock and visual solutions [i.e. assignment] is as follows:


Japanese Yen   

Approx. US $   

2002 Assignment   



2002 Stock   






2003 Assignment   



2003 Stock   



In 2003 the total revenue from "visual solutions" was up about 16% while the stock revenue was down just slightly. The company believes they are well positioned to leverage their high-end computer graphics strength as the advertising industry moves more in that direction.

The geographic breakdown of their revenue in 2002 and 2003 is as follows. Keep in mind that all of the visual solutions revenue was in Japan so the difference between the Japan figures below and the Assignment figures above would represent the amount of stock revenue in Japan.

The breakdown geographically is as follows:


Japanese Yen   

Approx. US $   

2002 Japan   



2002 N. Amer.   



2002 Europe   






2003 Japan



2003 N. Amer.



2003 Europe



The first figures below show consolidated ordinary profit which is more or less net profit before tax. The second set of figures are consolidated net profit which is the after tax figure.


Japanese Yen

Approx. US $

2002 Ordinary Profit



2003 Ordinary Profit






2002 Net Profit



2003 Net Profit



The amana group consists of 9 consolidated subsidiaries and 2 further companies in which it holds a part equity stake.

About 39% of amana's sales are to Advertising Agencies and 34% to production companies. Among their larger end user are: Electronic and computer companies - 15.5%; Food and Restaurants - 12.4% and Cosmetic companies - 10.4%.

The principal stock holders are Hironobu Shindo who holds 23.5% of the stock and Life Information Institute that holds 23.4%.


August 10, 2004 (Story 654) - Jupitermedia Corporation has reported revenues for the second quarter of 2004 of $17.8 million compared to revenues of $10.2 million for the same period in 2003. Net income for the second quarter was $3.5 million, or $0.11 per diluted share, compared to a net loss of $111,000, or $0.00 per diluted share, for the same period last year.

The company is on track to generate about $70 million in revenue in 2004 and in excess of $20 million of that will be from their Online Images division which includes Comstock Images,, and the recent acquisition of and The company also has plans to aggressively grow the image sales division and during the conference call CEO Alan M. Meckler indicated that within the next 3 or 4 years he expected the majority of the company's revenue to come from Online Image sales.

Revenue for Image sales alone for Q2 was $5.791 million with Comstock contributing almost $3 million of that revenue. They also pointed out that they have now owned ArtToday (,, for four quarters and there has been steady growth in subscription sales during this period. The quarter by quarter revenue was: Q3 2003 $1.8 million; Q4 2003 $2.2 million; Q1 2004 - $2.5 million and Q2 2004 $2.8 million for a total of $9.3 million in the year.

The company is looking at several other possible acquisition, but their focus is on wholly owning the content they acquire. When they first purchased ArtToday much of the content was not owned, but in the last year they have moved to purchase much of what is in the database and the company and expect to own 75% to 80% of the photos on that site by the end of the year. They wholly own all the Comstock and Thinkstock material.

Jupitermedia has been "aggressive on the acquisition front" and continues to look for small, efficiently operated organizations and libraries with unique wholly owned image collections. Rather than bringing these acquisitions under one umbrella and integrating them into one central collection with a single overall strategy Jupitermedia lets each company continue to operate in its current locality and maintain the unique characteristics of its brand.

The finance and accounting processes are centralized and with Jupiter's efficient use of the Internet they market the image products through their network that currently provides over 115 million page views and 4 million unique visitors per month. As an example of what their sites can do they pointed out that in the first four days that they have owned Thinkstock traffic increased on the Thinkstock site by 35%.

Meckler also indicated that in the next 40 to 70 days they will be announcing new product lines within their brands that will offer an "organic and revolutionary" way of selling Rights Managed images.


July 30, 2004 (Story 651) - Jupitermedia Corporation has announced that it has acquired the assets of Thinkstock ( and Thinkstock Footage ( for $4 million in cash, the assumption of certain limited liabilities and 50,000 restricted shares of Jupitermedia common stock. (The shares were trading today at $11.07 per share.)

Alan Meckler, Chairman and CEO of Jupitermedia said, "The addition of Thinkstock furthers Jupitermedia's position as one of the largest organizations worldwide in the business of selling stock images and Thinkstock Footage enables us to enter the rapidly growing business of selling video footage online."

The acquisition adds over 25,000 wholly owned digitized stock images and over 4,000 wholly owned stock clips to Jupiter's image library. Ron Chapple, founder of Thinkstock, will continue to provide imagery for Thinkstock and JupiterImages.

"We anticipate significant synergies between Thinkstock and our Jupiterimages division as well as our other Jupitermedia properties. We expect that this acquisition will immediately be accretive to our earnings," added Meckler.

JupiterImages network of web sites had a library of over 3 million images at the end of 2003 and as of January 2004 were generating over 85 million page views per month. Based on first quarter results their graphics related web sites (ArtToday,,,, and were on track to generate over $10 million in sales for 2004. In April Jupitermedia acquired Comstock that has been generating about $10 million annually and I estimate that Thinkstock's annual revenue is in the range of $2 million.

The second quarter report which will include the first three months of Comstock sales should be available in the next few weeks.


August 16, 2004 (Story 658) - a21, Inc. reported that its gross revenue for the second quarter of 2004 was $2.5 million. A21 completed its acquisition of SuperStock on February 29, 2004 so this is the first full quarter that they have owned the company. They had $797,868 in revenue from SuperStock in March giving them revenue of $3,325,165 for the first half of 2004. SuperStock generated gross revenue of $2.3 million for the second quarter of 2003.

A little over one-quarter of A21's 38.07 million shares are in public hands and they have been steadily declining in value since the acquisition of Superstock. The share price at the time of the SuperStock acquisition was about $.60 per share. On August 26th the share price was quoted at $.20 per share giving the company a market cap of $7.6 million -- less than the expected annual sales of the company. (To provide some perspective on these figures JupiterMedia has about 31 million shares outstanding and a current market cap of $507 million on annual revenue of $60 million. Getty Images has about 59 million shares outstanding with a market cap of $3.3 billion and annual revenue expected to be over $600 million in 2004.)

Net loss for the second quarter of 2004 was $194,000 or $0.01 per share, versus net loss of $357,000 or $0.02 per share, for the same period in 2003. Earnings per share for the second quarter of 2004 is calculated on the basis of 38.1 million weighted average shares outstanding, compared to 15.2 million weighted average shares outstanding for the same period last year.

Had the acquisition of SuperStock occurred at the beginning of fiscal 2004, revenue for the six months ended June 30, 2004 would have been $4.8 million. Net loss for the first half of 2004 was $794,000 or $0.02 per share, versus net loss of $623,000 or $0.04 per share, for the same period in 2003. Earnings per share for the first half of 2004 is calculated on the basis of 31.9 million weighted average shares outstanding, compared to 14.7 million weighted average shares outstanding for the same period last year.

In mid-July a21 announced the sale and leaseback of the Jacksonville, FL headquarters of its SuperStock subsidiary. The sale generated $7.68 million reducing existing debt by approximately $5.6 million and providing additional capital for growth and acquisitions.

It is interesting to note that when a21 acquired the SuperStock assets in February 2004, the company was generating about $10 million in sales annually. A21 paid $2,600,625 in cash and notes that represented an aggregate purchase price of a little over $5.7 million.

According to Albert H. Pleus, Chairman and CEO of a21 they have, "an archive exceeding 900,000 images. Since the acquisition, we have taken aggressive steps to improve the business, including streamlining processes, re engineering technology, adding content, expanding marketing, and driving traffic to our web sites."

Mr. Pleus continued, "We have also assembled an impressive leadership team to bring an excellent balance of industry, strategic, operational and financial experience to a21. Thomas Butta, a long time advisor and member of the Board of Directors, was recently named Vice Chairman and Chief Strategic Officer. He brings over 20 years of experience in positioning high growth companies in changing industries. Tom was formerly the chief Marketing Officer of Red Hat and Chief Marketing Officer and Executive Vice President of Parametric Technology Corporation. Additionally, we hired Bruce Haertlein as Vice President, Sales. Bruce brings over 20 years of industry sales experience. Most recently, Bruce served as Vice President of sales at Panurgy, LLC, and spent more than 15 years at AT&T building sales and marketing teams. Finally, we promoted Ian Lishman to Vice President, Visual Content. Ian has over 20 years of creative industry experience, and formerly served as Managing Director of Powerstock SuperStock's UK subsidiary."


August 10, 2004 (Story 655) - New methods of advertising are likely to cause a dramatic shift in the way still images are used. But the critical question for the stock photo community is will this result in an increase or decrease in revenue?

In a recent article written for the Financial Times of London, Jonathan Klein, CEO of Getty Images wrote. "Today, the most potent technology trend facing the imagery industry is the rapid and widespread adoption of broadband technology. This will make the internet what it has not yet become a visual medium." "The bottom line is that in a world where people have broadband connections in the home, there will be a large increase in consumer demand for visually rich websites and, consequently, increased use of imagery on the web by design professionals. As a result of this trend we expect that images will start to appear in larger sizes, requiring web designers to select higher resolution imagery for maximum impact."

In a story titled "The Lost Boys" in Wired Magazine's August 2004 issue the writer reports that young men, a major buying segment of the U.S. population, are spending less time watching TV and more on the Internet with as many spending their free time on the Interent as watch TV. As a result, according to the Wired report, advertisers are looking for new ways to reach this demographic and spending more of their advertising dollar on the Internet.

This raises some very interesting questions?

  • What portion of stock images licensed are currently being used on the Internet?

  • How rapidly is Internet usage increasing?

  • What portion of RM images used on the Internet have been properly licensed?

If this is the "most potent (technological) change facing the imagery industry," it would seem that sellers would want to know how rapidly this change is occurring. And yet, it appears that little effort is being expended to find such answers.

Klein believes that advertisers will start using images larger on the Internet, and presumably paying more money for the larger files, but is there any real evidence that will happen? And even if they use the images full screen, the smallest file size being licensed by the RF producers is more than adequate for full screen use on the Internet. Why would customers buy larger files and pay more? And for most sellers the size that an image appears on a web site is not a factor that is taken into consideration anyway -- all sizes are priced the same.

Liz Huebner, CFO of Getty Images, has pointed out that a high percentage of the images used on the Internet are RF, and because RF buyers are not required to specify how they intend to use an image there is no way of knowing what is being used on the web.

Visual Search

In fact, there is a new technology solution that is very capable of providing precise answers as to exactly which images are being used online, what size and how frequently.

The technology is PicScout (See Story 630 online). Some of the other visual search technologies probably also have this capability, but don't seem to be as precisely designed to serve this function as PicScout. This software searches the Internet for exact matches to images stored in its database. Currently, it is being used by Zefa, Index Stock and Masterfile with the aim of locating unlicensed RM uses on the Internet. There are indications that in the near future there will be announcements that several other agencies will also be using the service.

However, so far, everyone is focusing on getting reports that provide them with evidence they can use to collect for unauthorized use. It is possible for PicScout (or other visual search companies) to offer reports that make it easy for decision makers to easily compare actual usage to sales, and make decisions based on real numbers, not guesses.

This technology could also easily locate all the RF uses of particular images. So far, as best we can tell, no one is planning to use the software for this purpose. While the cost of such searches could not be recovered by billing for unlicensed uses, as is the case of RM, it would appear that the knowledge gained about customer usage habits would be invaluable, if a major shift in the industry is likely.

Unauthorized RF Usages

If they track RF usages, one of the dilemmas for the RF sellers would be whether or not to pursue image users who appear to have never purchased a license to use the image. The initial statistics from Zefa's use of PicScout were very revealing. They discovered that 90% of the uses of their images on the Internet were unauthorized, and of the unauthorized uses half were by organizations that had never purchased anything from the company. In the RF environment everyone is well aware that design firms purchase discs on behalf of one client and then use the images on those discs on projects for many different clients in the future.

While this is a technical violation of the licensing agreement, many sellers tend to look the other way for fear of angering a good customer. The main question is how much revenue is being lost in this manner and whether it is worth upsetting customers to try to collect it. On the other hand, if the sellers track these usages, at the very least they would have an idea of the degree of unauthorized use that is taking place. Indications are that at least some RF sellers are thinking about using PicScout for this purpose.

Here are some of the things that could be learned if RF uses were tracked.

  • Sellers would know exactly which images are being used online and how frequently.

  • Sellers could monitor the growth trends in this type of usage on a quarterly, or more frequent basis.

  • Sellers could determine if there is a trend toward using images larger than one quarter screen. This is something Klein thinks will happen, but to me it seems unlikely.

  • As more sellers move to track on line use of their rights managed images the ratio of RM to RF use online can begin to be determined.

  • If the searches were done worldwide, which is certainly what Getty would want, it would be possible to understand the relative online use of various RF brands in various countries.

  • By comparing images used with sales figures, it might be possible to determine the portion of the low end credit card purchasing that is for images used on the Internet, compared with those that will be used in print.

  • How often do the images used online come from discs that were purchased years ago.

  • If a good portion of the low end credit card users are using the images they buy on the Internet, or somewhere else.

Since the web address and the name of the end user are part of information recorded in these searches this could also help the major brands identify customers when the sales are made by distributors. On the other hand if such data is shared with distributors it could benefit them in their future marketing.

Since such knowledge is so critical to Getty's future growth it is surprising that they have not moved more aggressively to collect this data. But maybe we'll hear an announcement in the near future.

Unfortunately for the photographers, if the large sellers do start collecting this data they probably won't make a lot of it available to the photographers as they will consider it proprietary, despite the fact that such data could help the photographers make wiser creative decisions. However, PicScout is about to deploy a service for professional photographers (based on a cheap fixed fee model) that will allow them to monitor the end users of their images and cross check the data they are getting from their agencies.


As the market changes the risks are significant. Suppose advertisers start moving very aggressively toward spending a much larger portion of their advertising budgets on the Internet, video games and in ways that don't involve print. Suppose they don't use more still images in these new venues, but find other ways to communicate their message. Suppose in this new environment they can get by with more RF and less RM. Suppose that whatever they use they don't need large file sizes and find the smallest file sizes perfectly satisfactory.

If advertisers settle for RF and small file sizes for online use, the sellers can't just raise the price of these small files because that kills print uses and chases away all those low end print customers that the major sellers are currently trying to figure how to bring back into the fold. Unfortunately, when RF was started it set up a pricing structure that discounts electronic media use. That was OK as long as the vast majority of uses were for print. But, as that ratio starts moving in the other direction toward electronic use the RF pricing strategy becomes a major encumbrance and one that is very difficult to change.

We may not be able to alter the market trend -- whatever it turns out to be. But tracking it in order to have the earliest possible warning of the next trend and how fast it is moving would seem to be critical.


July 16, 2004 (Story 647) - Upper Cut Images is a new Rights Managed stock agency that expects to launch in early 2005 with 10,000 to 20,000 high end images covering all the major advertising categories according to Ellen Boughn, Vice President and Creative Director. The agency has currently signed about 20 photographers and is looking for a few more experienced stock shooters who are aggressive producers.

A few photographers who are considering joining the Upper Cut team have asked me for my opinion of the venture, so here it is. Upper Cut's plan is to limit the number of people they represent to under 100 in order to aggressively represent the work of each person. They are also funding some shoots. You can read more about their offering at

The company is owned by Miles Gerstein, CEO of Punchstock, a portal licensing rights to Royalty Free imagery. Gerstein is very experienced in the RF arena and his company probably generates in excess of $12 million in sales annually. He represents about 600,000 RF images from all the major brands, but does not produce any RF images under his own brand. Gerstein has a team of 10 to 12 full time sales people (and some part timers) that regularly visit advertising art buyers to encourage them to use the Punchstock site for their RF needs. These visits are the perfect opportunity to promote and RM Upper Cut offering.

In the last year or so the industry has seen an increased emphasis on personal contact marketing, relative to direct mail or e mail marketing, and Punchstock is well positioned to take advantage of this change. Punchstock has a customer base of 22,000 photo buyers.

According to Gerstein, Punchstock was pushed in the direction of also selling RM by many of their customers who regularly say, "We like your RF offering, but when are you going to give us RM as well?" However, Punchstock is not unique among RF sellers now looking to offer RM. Many of the companies with strong RF portals have started to look for ways to add RM to their offering. This may be partially due to the fact that all the major RM sellers are also offering a broad selection of RF imagery, and in order to compete any major portal must now acknowledge and offer both.

There are a couple other factors that could also be motivating this move. RF sellers have discovered that a high percentage of the customers they deal with (particularly as they have raised RF image prices) also occasionally buy Rights Managed images. Thus, an offering that includes RM and RF is likely to increase traffic and overall sales.

Another motivating factor may be that RF sellers are beginning to see a leveling of sales. There is an oversupply of RF content and adding a lot more RF content doesn't necessarily increase sales. Certainly some RF sellers are seeing growth by taking market share from others, but overall I believe the growth of RF sales in the industry as a whole is flattening in terms of number of images used. The only hard numbers I have to make this guess are those of Getty Images so I could be way off base, but this is what I think is happening.

So we accept that it is a good idea for a seller of RF images to also be selling RM. The critical question then becomes, "What strategy should they use to acquire those RM images? It is on this point that I question the Upper Cut Images strategy. I think most buyer want to go to sites that have a very broad cross section of both RF and RM. Getty, Corbis, Alamy for example. While occasionally RM buyers need exclusive rights to the images they purchase, the vast majority of RM revenue is generated from non exclusive sales, so exclusive rights to image -- while nice to have when the buyers need it -- is not critical to generating significant revenue from RM sales. I believe that in the current environment the tighter a company edits, and the more they limit the number of photographers and images, the less chance they have to license rights to a significant numbers of RM images.

Ellen Boughn came from Workbookstock. She was the driving force behind their philosophy of tight editing that aimed for a small image collection that would outdo Stone and would directly compete with Getty's Stone collection. To an extent they have been successful in achieving this goal. When Workbookstock makes a sale it is often for a high end use and for good dollars, but I don't think they make enough of those sales to generate reasonable revenues for most of their photographers. In addition, a whole lot of the images that the photographers are producing which would sell if they could be seen never make it online. (This is what I hear from photographers, but I don't have enough solid data on Workbookstock sales to be sure this is true, so maybe I'm wrong.)

It does seem clear, however, that Boughn's philosophy for Upper Cut Images is much the same as she had for Workbookstock with a couple small exceptions. She emphasizes that she is looking to work with less than 100 photographers giving each photographer a higher percentage of the collection. However, each photographer will also have to be a significant producer for Upper Cut Images to ever have a large, broad based collection. Indications are that editing will not be as tight as it is at Workbookstock and that more "sister" images will be included in the offering. Another exception is that photographers will be allowed to add up to 15% of the images rejected by the Upper Cut editors to the online collection.

This is in recognition, I believe, of what Getty has learned with their Photographer's Choice collection. Getty has discovered that photographers do know a little bit about what buyers want in the way of images and that often their agency editors don't have perfect foresight as to what buyers will want in the future. (Getty's sales statistics indicate that the average Photographer's Choice image generates almost twice as much revenue as the images picked by their editors.)

A small, highly productive group of photographers is also characteristic of how a lot of RF imagery is being produced. RF producers tend to work with very few photographers and give them a lot of direction and guidance. This may be beneficial for the photographers accepted by Upper Cut Images, provided they enjoy working in this manner.

However, as I see it the small tightly edited sites are having a great deal of trouble getting buyers to come to them. With aggressive marketing buyers may come a few times, but if they can't find something they can use they are likely to go somewhere else the next time. And if the site doesn't have a very broad collection of imagery there's a good chance the buyer won't find anything that will fit his specific need even though the site may have a lot of great images that would fulfill other needs. On the other hand, the fact that these buyers CAN fulfill a lot of their RF needs on the Punchstock site may be enough to keep them checking out the RM options there too. From my observations the broader the variety of material an agency tends to offer the better it seems to be doing for the big producers as well as the small, more specialized producers.

Gerstein says, "The Upper Cut images will be made available through the Punchstock site and the default search will be to pull up both RM and RF with each search. If the customer wants to look at only RM or only RF there will be options to do that, but the default will be to bring up RF and RM images side by side." He also indicated that according the Getty 90% of their customers use the default search. "That's obviously the way to go and not something we have to reinvent," he continued. The Upper Cut URL will also have all the Punchstock images.

One thing that appears not to have been resolved at this time, is the priority that Upper Cut images will be given in any given search, relative to the RF images of the other brands represented. Will all the Upper Cut images come up first before any of the RF are shown? While that is one possibility, I doubt that is the approach they will take because that might detract from the usefulness of their site for those customers only interested in RF, and RF is Punchstock's major bread and butter. They could put up 3 or 5 images from each brand before they put up additional images from the brand. That would be democratic, but won't push RM over RF because the overall returns will be so predominantly RF. Balancing this so it increases RM revenue while doing nothing to detract from RF revenue may be a very tricky algorithm as Getty learned in 2003 (See Story 578) when they overbalanced their site toward RF and had to readjust to increase their RM sales. Since the images in the default search will be predominately RF (600,000 to 20,000) the way this algorithm works will have a major impact on how frequently the RM images of the Upper Cut photographers are seen.

In the past one of the big arguments for a tightly edited site has been that it was important that the buyer should not get too many returns from any given search because this would discourage him from using the site and he would likely go somewhere else. It is a nice theory, and it may have been true when online search was in its infancy, but in practice it hasn't really seemed to work for several years.

In the near future, Punchstock will also be introducing a search within a search option, that will include a history of all the steps within each search. This is designed to make it easier for buyers to narrow searches when they get many returns from a particular search.

Another thing to consider when looking at tight editing is the potential that effective Visual Search offers down the road. Punchstock plans to have a visual search system available for its staff to test in September 2004, and they expect to roll it out for end users later in the Fall 2004. (I did an in depth story on this technique in my last newsletter or you can check out the SimSearch feature on to get an idea of how one of the visual search offerings works.) In the next couple of years I believe Visual Search will make totally irrelevant the number of returns that come back from any keyword search because the buyers will be able to visually adjust their search criteria to fit exactly their particular need at any given moment.

Upper Cut photographers should also recognize that the images they produce will be sold through agents in countries other than the U.S. and UK and the percentage of the total license fee will be reduced by the agents sales commission.

Thus, I am skeptical, that the Upper Cut strategy of working with a few photographers will be successful for the photographers, although any positioning up market and increased revenue will be a success for Punchstock. If it doesn't generate the desired results, Miles Gerstein will still be in a good position, given the success of his Punchstock operation, to modify the strategy. And, because no one except possibly Getty and Corbis has accurate statistics on a lot of things that happen in this industry all we can really do is guess about the future.

I think the trend that is more likely to successful is one where a portal with a good distribution network like Punchstock's accepts content from a variety of suppliers and requires those suppliers to scan and keyword the images and prepare them so that all the distribution company has to do is load them on their site and sell. This dramatically cuts the distribution company's costs. To a great extent, this is what Getty is doing with its third party strategy, and other companies are following the Getty lead. The photographers may not get as high a percentage this way (because there is a second cut in the royalties), but the indications are that many of the photographers currently involved in such arrangements make more money because they get more images online faster and they make a lot more sales.


July 30, 2004 (Story 651) - Art Directors at Dell and Gateway liked Doug Menuez's RF shots of a girl on a college campus so much that they both picked images of the same girl from the same shoot for their back to school ads selling their company's computers. As one wag noted, "This young lady going back to college appears to have a bit of trouble deciding whether she wants a Gateway or a Dell PC."

The images were from PhotoDisc so no exclusivity was guaranteed. In both cases the art directors picked two images -- one for the foreground and another for the background and merged them together to produce the composite they used.

Gateway used Photodisc Green image ED001041 for the background, but didn't like the way the girl was looking in that picture so they added Photodisc Red image LS011062 to the foreground.

Dell used Photodisc Green ED001044 for the foreground shot, but put her in front of a totally different building (we haven't figured out which image was used for this purpose yet).

One thing they both accomplished was to get their images for very little money. The maximum file size that Getty offers for a single image purchase of these images is 28MB. Photodisc Green images for this file size are priced at $249.99 and the Red images are priced at $329.99.

Menuez tells me that these images were created as part of a production shoot organized by Photodisc and they retained all the film and complete control over how the images were used. Neither of the art directors may have realized how many similar shots of this girl were available because the keywording on the images is not consistent and there is no simple way to pull up all the similars once an image has been chosen. On the other hand, maybe the art directors didn't care.

For a look at the two ads go to:


July 16, 2004 (Story 646) - PictureQuest has launched a new, more powerful version of its current e commerce site at It is using a new state of the art data clustering technology infrastructure in an entirely new data center to ensure uninterrupted service and superior speed.

Creative professionals will now find unparalleled accessibility and tools to search, select, license and download images. They may search the entire library of RF and RM images in a single search without registration. With a completely revamped "My Account" tool, users can access all past licenses including prior licensed images and pre set their desired search preferences and license types.

In addition to a new look and feel, the new employed a massive data conversion project to ensure that its loyal customers enjoy a complete continuity of service. In total, over 500,000 images were re processed, creating in excess of 3 million new viewable images. Customer histories for 416,000 companies were converted including all their associated shopping carts and lightboxes.

"We didn't want to be just another stock photography store on Internet Avenue," noted David Moffly, CEO of the Dynamic Graphics Group (parent of PictureQuest). "By combining speed, easy search, depth and breadth of inventory with the highest level of customer service, we are offering our clients and those visiting for the first time a consistent experience that effortlessly answers their image needs, while transforming their desktops into the ultimate digital stock resource. This new site is the culmination of nearly two years of work by our technology teams collaborating with our sales teams and I am extremely proud of their achievement."

"The real beauty of this technology solution for our customers is that they now have a comprehensive digital asset management tool at their fingertips, from which they can access and download any past purchase they've made from any one of the brands available through," said Lisa Platz, Director of Web Services.

Copyright © 2004 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, 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:  


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