Staff Reduction At Corbis

Posted on 1/19/2001 by Jim Pickerell | Printable Version | Comments (0)

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STAFF REDUCTION AT CORBIS


January 19, 2001

Corbis has announced a company-wide restructure and the immediate layoff of

approximately 80 of its 1,300 employees worldwide. In an internal memo Joint

Presidents, Steve Davis and Anthony Rojas, characterized this as a "painful" decision.

The positions eliminated are spread across Corbis offices in New York, Bellevue, Los

Angeles and London, and are primarily in marketing, technology and analog operations.

Corbis has re-aligned their business into a single brand with three separate market

groups -- Creative Professionals, Business Communicators and Consumers. Key elements

of the reorganization are a consolidation of redundant functions generated through

acquisitions and reduction of analog support activities as new digital platforms are

adopted. They have also created shared services departments to provide a cohesive

approach to support the newly re-aligned groups.

Also in the internal memo, Davis and Rojas said, "Several people have asked whether

profitability has become our vision."

In answer they said, "Profitability - or really being able to pay our own way and not

rely on outside investment - is not a vision, but simply a requirement for a healthy

company. We have targeted 2002 as our break even year for several years." Based on

this statement it is interesting to note that despite a significant increase in sales

in the past 18 months they are still spending more in operating costs than their

share of revenues.

They also indicated that "higher productivity performance" is a very important issue,

and said, "Corbis is considerably under industry averages in terms of revenues per

person and some other productivity measures. We must improve our productivity, and

our service to both photographers and customers, in order to remain competitive and

healthy."

(Corbis would not disclose what they think the "industry averages" are. I believe

there are wide variations throughout the industry. One factor that affects these

averages is the emphasis an agency places on catalog production and distribution, or

on file research. A catalog production agency that focuses on selling catalog images

through many sub-agencies can operate at a much higher revenue per person ratio than

an agency focused on file research. Given the variations, I think the overall

average is probably slightly less than $100,000 per employee. I believe Corbis'

figures aren't too far from this number. However, their target is certainly Getty

Images which has about 4 times Corbis' annual revenue and only about twice the number

of employees giving them an annual revenue per person figure of about $185,000.)

    (**Note: In the past when I have quoted such figures some readers have asked is this

    is average salary. NO. This is the total annual revenue of the company divided by

    the total employees. This is a figure commonly used in industry to determine

    productivity. Obviously, the average employee salaries would be much, much lower.)

Many photographers will be happy to know that no Stock Market, Sygma, or Outline

employees are affected by these layoffs. The Sharpshooters office in Miami will

close at the end of January, but that was announced in October. All Sharpshooters

employees who accepted new positions with Corbis were unaffected by the layoffs.

When asked for examples of "redundant functions" sources explained, "Corbis

previously had three separate marketing teams, one for each business unit

(professional licensing, business communicator, consumer). Each business unit had

it's own brand, URL, etc. We are unifying the company under a single brand, and the

formerly separate divisions will now function as separate channels within the single

brand. [We'll be more market-oriented and less product- or service-oriented.] As a

result, we'll be consolidating these three marketing teams into a shared services

group, which means we will develop a more cohesive marketing strategy and, more

importantly, achieve more consistent approaches to enhance the brand experience for

our customers. The result will be a clearer, more powerful presence in the

marketplace. As part of that effort, we identified some redundant positions, mostly

at the tactical implementation level."

Marketing Director Fran Schrieber and several of her staff are among those laid off.

The new shared services departments that formerly had separate groups working for

each channel will include marketing, event planning, print production, web

production, media planning, creative services, and public relations. These shared

services will support all three channels, providing a more cohesive approach --

across disciplines and channels -- and a single brand.

As Corbis moves away from analog fulfillment some support activities such as the use

of wet labs is diminishing. Also the massive project of editing the Bettmann archive

and digitizing the selects is winding down and the need for researchers to go through

those analog files is diminishing.

The future of the analog files is unclear. Corbis continues to emphasize that they

are committed to an all digital model and that it has never been their policy to

maintain an analog file. However, they recognize that there is some value in the

existing analog files they have acquired. They expect to maintain analog files at

Sygma, Saba, TSM, Outline, etc. "for some time to come," and to scan-on-demand as the

situation requires. What is unclear is will they continue to feed these analog

files? Will they retain the researchers who have some idea as to what is in the

analog files? Will they search them as a routine, or only under intense pressure

from a buyer who insists? The idea that they will maintain them certainly doesn't

fit with what they did with the WestLight files.

Photo District News reports that Corbis is discouraging photo researchers from

visiting their offices to search through the files, and they are refusing requests

from editors to find and scan analog images. One researcher was told that Corbis had

digitized the most popular UPI images and that the rest are being moved to a

warehouse.

Corbis put heavy emphasis on the consumer markets a couple years ago, but now they

are scaling back in that area and the Director of Consumer Products, Sally Veladi,

was let go. Davis and Rojas said, "we will rebuild our consumer internet activity

with a smaller team given the market conditions in that area."

While positions are being eliminated it is also likely that other positions will be

created as the work load moves in new directions. New positions in Photographer

Relations that will increase Corbis' focus in helping photographers create compelling

pictures are expected to be announced in the near future.

The definition of "Creative Professionals" and "Business Communicators" can also be

fuzzy. Corbis defines Creative Professionals as the traditional users of stock

photography, including ad & graphic design, news outlets, magazines, book publishers,

etc. Marketing strategies include offering a comprehensive, compelling collection of

great photography, fine art, footage, etc., as well as employing state-of-the-art

technology to ensure that we support and enhance the client's work flow -- which is

rapidly going all-digital.

Business communicators are mostly people who use tools like PowerPoint in business

presentations. For this market we're offering presentation templates, royalty-free

images, illustrations, and cartoons (through a partnership with The Cartoon Bank),

again using the web to allow for an all-digital work flow. Go to www.corbis.com and

click on the "Business Communicators" button for more.

The London memo provided the following additional background:

    As a result, the layoffs today stemmed from several inter-related decisions:

  • Our new unified organizational structure. Under this plan, we have

    developed "shared service" departments, such as marketing, to increase consistency

    and focus, and lower costs. As we have decreased the size of internal teams, we will

    also be outsourcing services that were previously performed internally.

  • Moving toward more digital solutions. For several years, we have been

    consistent in our view that the photography and media industries are becoming largely

    digital, and we have been working toward a 100% digital work flow for some time. In

    2001, we are making large strides to that end.

    As a result, there are some positions that have become obsolete as we have less

    activity in creating, managing and distributing prints and transparencies.

  • Consolidating acquisitions: We have acquired eleven companies over the

    past few years. As we work to consolidate these companies into an integrated whole,

    certain positions have become redundant or obsolete as activities are integrated or

    eliminated. Other companies adopting such similar consolidation and digital

    strategies, including our largest competitor, have witnessed much larger layoffs

    recently.

  • Completing projects. This year we are wrapping up certain large,

    staff-intensive, projects, such as some foundation technology development and

    Keystone editing of the Bettmann collection, which were planned in our long-term

    strategic plan.

  • Scaling back certain activities. We are cutting or scaling back some

    specific projects in order to focus on our most promising activities given the

    current markets. For example, we will rebuild our consumer internet activity with a

    smaller team given the market conditions in that area.

These decisions are the unfortunate part of the realities of growing a business such

as ours. We have taken many steps to provide the best transition possible for

departing employees, including separation pay and job search assistance through an

outplacement firm.


Copyright © 2001 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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