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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.