Random Thoughts 37

Posted on 8/13/2001 by Jim Pickerell | Printable Version | Comments (0)



August 13, 2001

Corbis Sales

On the recent sales report from Corbis many photographers found several $10 sales to a client known
as GMR. The category was "Exhibit: Private Gallery." It turns out that GMR stands for "Gates Medina

Remember all those video panels Gates had installed in the walls of his house. Evidentially, he is
currently viewing a lot of images on those panels. This fee is more than three times the amount
normally charged by Corbis for a personal use license, but it is for a ten year license to use each

In these tough economic times photographers, and Corbis, can be thankful that Bill is still buying

Corbis Long Term Incentive Plan

In an effort to develop some profit sharing incentives that would inspire their employees, Corbis
set up their Long-Term Incentive Plan (LTI) in the spring of 2000.

In theory this would let employees share in the success of the company, but because the company is
privately held the LTI could not be tied to stock value as is the case with most profit sharing
plans. Thus, Corbis asked Price Waterhouse Coopers (PWC) to calculate the value of Corbis and
develop a formula for what each LTI share was worth.

Once a year PWC calculates the new value of the LTI units for the purpose of profit sharing. The
initial value of each LTI unit as of 1/1/2000 was $1.00. While the total dollar value of the company
went up in 2001, as of 1/1/2001 the value of the LTI shares dropped almost in half to $.51.

According to a memo to employees from Steve Davis and Tony Rojas about $.40 of this decrease was due
to market conditions outside Corbis' control and about $.10 was a direct result of Corbis'

In explaining the drop the memo said, "To begin with, we know why our unit valuation went down.
First, 1/1/2000 was at the apex of the stock market, and we all saw how the market, especially
NASDAQ, dropped during the year. This is just like house prices; if your local housing market goes
down, so will the value of your house. Since Corbis "remodeled" a bit and added new "rooms" through
acquisitions, the Corbis "house" is worth more on 1/1/2001 than it was in 1/1/2000. But it isn't
valued as highly as it would have been in the much higher 1/1/2000 market.

"In addition, we issued many new units to Bill Gates, our owner, in return for the money he invested
during 2000 for acquisitions and our operating expenses. So the combination of the lower market,
Corbis' performance, and issuing many new units to Bill, resulted in the $.49 drop in our LTI unit
value. As noted, most of this was due to the market.

"How about the $.10 per unit decrease, approximately, that was due to performance? Last year, we
missed revenue and expense targets, and to make up for this, Bill invested more of his capital than
we forcasted. These all catch up to our LTI unit price eventually."

Corbis is now exploring different strategies for restructuring the LTI to ensure that incentives
remain relevant.

Rumors: We have heard rumors that Bill has said he will put up to $15 million into Corbis in 2001,
$5 million in 2002, but as of January 1, 2003, Corbis needs to be cash-flow positive and should not
expect to get any more cash from him.

Getty And Reuters

Sources indicate that Getty made an offer of $75 million to Reuters for the rights to re-sell the
Reuters archive. Reuters rejected this offer and it is believed that the negotiations have been

We believe the negotiations between Reuters and Sipa Press are still active as we reported in story
419 .

Cost Of Doing Business

The Editorial Photographer's site has an interesting survey on the cost of doing business for
editorial photographers. You can access this information by going to


They break down annual expenses for: office rent, telephone, advertising, photo equipment, computer
equipment, subscriptions, insurance, healthcare, professional services, utilities, repair, car and
truck, office supplies, non-billable photo supplies, postage, non-billable payroll, and retirement
account. So far 82 people have answered for the year 2000 with an average total annual expenses of

It also provides comparisons with costs going back to 1980. In 1980 the average total expenses of
the photographers reporting were $21,678 and in 1985 they were $24,376.

Average daily cost of doing business in 1980 was $86.71, $97.50 in 1985, $153.26 in 1995 and $253.16
in 2000.

The results are not scientific as the statistics are based entirely on those who choose to answer
the questions, but they are worth considering none the less. New data continues to be accepted.

Getty August Sale

Gettyworks is offering a 15% discount on photos purchased before August 31st. Their online promotion
says: "Add impact to your presentation. Spice up that report. Spruce up your web site. You'll find
over 70,000 photos on the gettyworks site starting at just $9.95 each.... For a limited time, you'll
save 15% on one or as many as you need."

These are RF photos so photographersget 20%, of less, of these $8.50 sales.

Zefa Sales Growth

Zefa in Germany ( www.zefa.de )
has experienced 30 percent growth in the last 3 years. The national
profit margins alone for the months of June and July far exceeded those for the same period in the
previous year.

"Our success is not only due to the outstanding quality of our images, but also as a result of the
extremely high standard of service offered to our customers," according to Erwin Fey, Managing
Director of zefa visual media gmbh. "While the competition are laying off workers we are continually
expanding the number of employees with seven additions in August alone to the work force in the
sales, production and computer departments."

Zefa has also opened a new office in the middle of Paris near some of the largest advertising
agencies and publishing houses.

Anne Boussarie (33) is General Manager of zefa France and is primarily responsible for sales and
marketing. She has been working in the industry since 1995, previously with Getty Images and
Photonica in France.

"The opening of our own office in Paris is yet another important step towards further and continual
office expansion," said Tomas Speight, who as joint Managing Director at zefa visual media has
overall responsibility for foreign partners. "At the beginning of next year we will be making our
move onto the American market," as stated within the groups ambitious plans.

Along with the opening of offices in Paris, Zefa has a further 12 subsidiaries and partner agents.
zefa visual media gmbh is the third largest company, worldwide, in the stock photo business, after
Getty and Corbis.

Recession For Editorial Photographers

The Digital Journalists has a thought provoking editorial on the state of the business for editorial
photographers. You can read it at


There are indications that Sygma sales in the first half of 2001 were off 36% from what they were in
2000. However, one other editorial stock agent said, "That's good. From what I hear most (editorial)
agencies are down much more than that."

CEPIC In Budapest

The CEPIC Congress in 2002 will be in Budapest, Hungary from May 23rd through 26th. It is not too
early to begin planning to attend this conference where hundreds of stock agents from around the
world meet.

As well as networking opportunities, there will be special sessions for news and heritage agencies,
a study of the new European copyright directive and its implications, and time to enjoy the
hospitality of the city. For more information go to
www.cepic.org .


- Getty Second Quarter Results

A reader has pointed out that the drop of Getty results for 2001 is likely to be greater than the 7%
I calculated when compared with 2000. I failed to factor in that in the 1st quarter of 2000 Getty
did not own VCG.

- Pictor Bankruptcy Update

I indicated that they currently have 8 employees. In fact they have a total of 11 on salary, 8 in
New York, 2 in Washington and 1 in Los Angeles.

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 301-461-7627, 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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