Iconica

567

July 17, 2003

At the end of May Amana launched a new brand known as Iconica
( www.iconica.com ). Amana is a Japanese
company and its main stock brand is Photonica. David Neilson, CEO of Photonica and
Iconica, says, "Photonica has been known as a conceptual, arty, avant garde, prestige
brand for the last 10 or 15 years. People consider it for a specific set of applications
or uses. Not all the available images exactly match this criteria but, Photonica leans
more in this direction than toward the mainstream. If you are looking for an avant
garde, conceptual, thought provoking, alternative image you are more likely find it at
Photonica than you would at Stone, Zefa or the other brands. Photonica has always wanted
to try to concentrate more in this direction and have more of this type of imagery."

However, recognizing that there is a significant demand for more mainstream imagery,
Amana has looked for a way to attack the lucurative middle ground that is highly
populated by some strong brands. Their goal was to find a way to offer such imagery to
their customers without diluting Photonica's position in the market, and the idea for
Iconica was born.

Iconica images, while contemporary, are much more illustrative and subject based than
the typical conceptual Photonica image. They are more focused toward classic concepts
and explore metaphors and ideas.

Another distinctive is in the way images are priced and licensed. Iconica offer easy
on-line pricing, unlike Photonica where everything must be negotiated. Iconica's
promotional material tells the customer that the pricing system offers the "simplicity
and affordability of royalty-free." The RF part may scare some photographers, but if
you use their price calculator you'll quickly discover that prices are based on usage
and much higher than your average single image RF price. If buyers think they are going
to find the "affordability of royalty-free" at Iconica, they are likely to have a rude
awakening.

Exclusivity

One of the key differences in the Iconica offering is that they only provide one degree
of exclusivity -- a worldwide exclusive. Everything else is sold on a non-exclusive
basis. However, Iconica buyers have the advantage of being able to immediately search
the image history online and determine how many times it has sold, the territory and
industry of each sale and the date the license expires.

Neilson says, "Over the past dozen years or so one of the biggest curses in the RP
market has been maintaining a rights controlled process. It is complicated for the
agencies to construct and labor intensive. With Iconica Rights Control has been put into
the custody of the clients. This actually mirrors how the business really works. More
and more customers ask the agency to do a rights check, but then go for a non-exclusive
use instead of an exclusive. If there are no problems with past uses, then they take the
risk that their competitor won't use the same image in the future. Iconica's system
allows the buyer to do that check themselves."

Of course, this doesn't protect the buyer from a competitor using the same image
tomorrow, but if the protection is important enough for the buyer he can purchase a
"Worldwide Exclusive" and the image will be removed from the market. According to
Neilson such worldwide rights "are usually in the tens of thousands of dollars," and
they are very rare. It is believed that the Iconica system will give buyers what they
need and dramatically reduce the administrative overhead for the agency.

Neilson points out that one of the reasons they haven't integrated the Photonica and
Iconica brands is that given the graded rights management system that Photonica uses it
becomes very tricky to structure a system to PHYSICALLY BLOCK a sale depending on the
PREVIOUS use.

He explained, "This requires multi-branch links between the rights objects so that each
understands its position in the tree in relation to what could possibly constitute a
conflict or clash. Given that we have around 1,500 rights objects available in
Photonica spanning territories, media, applications, industries, languages etc... it
starts to get very complex. Here's an example. UK is a subset of Europe. This means
that if an image is sold exclusively for the UK market, then any further sale for UK or
anything up the hierarchy [e.g. Europe] would also be blocked out. This is complex
enough, but it gets really tricky when there are multiple hierarchies. For example, UK
is also part of the 'English Language speaking countries', a fairly common one for book
covers, and that same sale would also block out future uses in this rights space too.
The whole thing gets really messy when you start to build an interface around this as
its not possible to tell a client whether they can use an image or not until after they
have entered all the rights details and the system can do a check. At that stage I know
I, and most other people, would be annoyed at being told NO, after having taken the time
to fill out all the on screen forms. The 'informed choice' method of non-exclusivity
used by Iconica makes the whole thing so much simpler."

While the images can be purchased anywhere in the world, currently the site is only
promoted in the U.S. and the pricing is at U.S. rates. The pricing calculator asks you
to indicate the country where the image will be used, but the price remains the same no
matter which country you enter. Neilson says they started pushing Iconica in the U.S.
market first because it is their biggest territory and they want to make sure that the
business idea works well before they expand it. Taking it to Europe is a bigger
challenge. The content requirements are different and there are problems that have to be
overcome with multiple languages and taxes. Once they have learned the lessons from the
U.S. operation they will take an improved version into the European territories. He
expects to begin offering Iconica images in Europe within a year.

Iconica currently has about 10,000 images on its site and works with about 110
photographers including some of the leading names in stock photography such as: Tom
Grill, David deLossy, Pete Turner, Eric Meola, Doug Menuez, Jack Hollingsworth and many
more. The photographer's names are listed under the image thumbnails on the site.
They are currently adding new images at a rate of about 2,000 per month.

All files are scanned as 100MB TIFF [jpeged to 25MB]. That large size together with
high-res 48MB TIFF [jpeged to 10MB], 'small' 10MB TIFF [jpeged to 1MB] and
unwatermarked screen and thumb are sent as secure URLs to the client after they've
purchased so they have the option of downloading the one that best fits their
application

Iconica's contract with photographers is image exclusive, plus similars, not
photographer exclusive. They are interested in expanding their list of producers, but
they are most interested in those who are prepared to be volume producers. Their goal is
to work with a relatively tight group of photographers so that each one gets a bigger
share of the cake.

About 50% of Amana's revenue comes from doing assignments in Japan for major advertising
agencies and corporations. This not only includes all shooting costs, but
post-production services as well. They have a staff of approximately 250 in Japan
handling the assignment and stock sales. Assignment revenue is growing at about 20% per
year. Handling assignments in this manner is unique to the Japanese market and probably
has a great deal to do with Japanese manager's propensity for doing business with large
conglomerates. About 33% of world revenue comes from selling stock in the West through
the Photonica brand. Stock sales in Japan and Asia make up the remaining portion of
revenue, and in Japan Amana handles several stock brands.