Randon Thoughts 89

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October 14, 2004

SAA Launches Investigative Study Using PicScout

The Information previously in this item has been updated and now appears in Story
688.

For more information on PicScout, go to www.picscout.com

RF Pricing

For those who think RF pricing is a simple model a look at the prices offered by the various brands currently on the Gettyimages.com is instructive. Depending on brand, prices range from $44.99 to $409 for a single image use.

There are several variations of the largest file size offered. Digital Vision offers a 75MB, 300dpi CMYK file. Everyone else offers RGB files at this larger size. Image Source and Thinkstock have 60MB, 300dpi RGB's; Stockbyte offers a 75MB, 300dpi, RGB and Dex Image offers a 36-72MB, 300dpi RGB.

The smaller file sizes of Brand X and Thinkstock are not as standardized as the rest of the brands. Instead of a 10MB file Brand X has files that range between 5 and 18MB and instead of a 28MB file they offer files that range between 16 and 32MB. Thinkstock offers a low resolution of between 1 and 2MB and a medium resolution of between 5 and 18MB. However, we believe that for new images everyone is aiming at the 10MB and 28MB standards.

For customers with small occasional uses some of these prices can be very expensive when compared to licensing rights to an RM image. On the other hand, customers who reproduce their images in large sizes, or in high circulation projects can certainly benefit from using even the most expensive RF. In addition, these high volume customers tend to receive volume discounts on the list price of every image they purchase, based on their annual spend with Getty Images. We have no idea what these discounts are, but there are indications that they may be significant when compared to the list price the small user must pay.

Another trend within RF is for production companies to split a brand in order to offer images at several different price points. The PhotoDisc Red, Green and Blue brands are the most obvious example, but Stockbyte is developing a new brand called Stockdisc that is aimed at the lower end of the market. Observers should not be surprised if Stockdisc appears on Gettyimages in the near future at a different price point. We think many other production companies will begin to follow suit as they attempt to raise prices to the high end user and expand their market on the low end.

Getty To Launch Royalty-free Zone

Getty Images has recently added seven new royalty-free collections, doubling its previous offering. It currently has 242,086 RF images on the site. Later this month, Getty Images intends to launch "The Royalty-free Zone", a new landing page at gettyimages.com, for customers that are only looking for RF. This should make it even easier for RF customers to access special offers and the latest RF imagery, including these new collections.

It is unclear how this might affect RM sales as customers have become accustomed to looking at RM and RF side by side, selecting the image that is most appropriate to their needs, and then determining the price and the usage restrictions. Since users of the Royalty-free Zone will no longer be able to see RM images as easily - and since the "Zone" will be promoted heavily -- there may be a falloff in RM sales.

It is our understanding that users will still have the option of the current search that mixes RM and RF side by side and gives RM a degree of priority. It also seems likely that sometime in the not too distant future Getty Images may also offer a Right-managed Zone that will make it possible for customers to search for only RM images and see the latest offers connected with the RM collection.

Since customers have for some time had an easy option on the first page of the Creative search to choose either "All RF" or "All RM", it appears that the principal advantage of the "Zone" will be to provide customers with special offer promotions.

A21's Real Estate Move

a21, Inc. continues to make smart real estate moves. It has subleased 40,000 square feet of its 73,000 square foot Jacksonville, FL headquarters to Recruitmax, a human resources software company. Under the terms of the agreement, Recruitmax will pay a21 $3.5 million over a six-year period or an average of $583,333 per year.

a21 acquired the land and building in February 2004 with the acquisition of SuperStock, Inc, but sold the land and building in June 2004 for net proceeds of $7.5 million and leased back the building for a twenty-year term. Under the terms of the lease they will pay approximately $750,000 in rent for the first year with slight increases year-by-year thereafter. If we subtract the revenue they will receive from the Recruitmax sublease from their total rent their actual rent cost for the 33,000 square feet they need since they moved from being an analog business to a digital one will be about $166,667 per year.

a21 will provide approximately $200,000 in tenant improvements for Recruitmax and pay a brokerage fee of approximately $150,000. Recruitmax will pay a security deposit of approximately $60,000 and provide a letter of credit to the benefit of a21 for approximately $475,000.

Everyone in the industry is anxiously awaiting evidence that a21 can work this same kind of magic in the business of licensing stock images.