Random Thoughts 92

Posted on 12/7/2004 by Jim Pickerell | Printable Version | Comments (0)



December 7, 2004

Amana In Play For Zefa?

Rumors abound that Amana is considering making an offer for Zefa, and Corbis' interest may be cooling down. Zefa would not comment for this story.

In August Amana raised over $100 million in capital on the Japanese stock market for a 38% share of the company (See Story 657). Thus, they should be able to easily raise the necessary funds if they are truly interested in acquiring Zefa.

Industry sources believe an Amana/Zefa combination has a serious potential of becoming number 2 in the industry. The combined annual revenue of the two companies would be in range of $110 to $120 million.

In addition, without some serious infusion of new imagery it is believed that Amana can, at best, only expect very modest growth. It is worth note that Amana's revenue from the sale of stock images declined in 2003 compared with 2002. The company's overall growth during this period was based entirely on its assignment business in Japan.

While it is unclear as to how serious the Amana offer may be, at least three groups of participants are believed to prefer Amana over Corbis.

  • The Zefa staff, particularly senior staff, seems to have the impression that there will be no place for many of them once Zefa is integrated into Corbis. Corbis' past integrations after acquisitions, and particularly the problems at Sygma in France in 2002, tend to make the German staff very nervous about a Corbis takeover.

    The general belief is that Amama might allow Zefa to function more as independent brand giving the current staff more autonomy than is likely at Corbis.

  • The sales partner agencies (70 in all) have been told that as soon as possible after the Corbis takeover is finalized (when contracts expire) relationships with them will be terminated.

    Some agency suppliers that were negotiating with Zefa to represent their work in Europe when the Cobris bid was announced, have moved to sign agreements for other representation.

  • Many Zefa photographers that had unsatisfactory experiences with Corbis in the past would prefer a different option.

    How Does Your Income From Getty Compare With The Averages?

    If you have images on the Getty Images web site and are interested in whether the amount you are receiving is above or below the average other photographers are receiving, here's an exercise that might interest you.

    You'll need two important facts. On November 16, 2004 there were 686,507 images in the "Creative" section of Gettyimages.com. And, in the last four quarters (October 1, 2003 through September 30, 2004) the total revenue Getty generated from single-image Creative sales was approximately $453 million.

    1 - Take the total number of images you have on the site and divide 686,507 into that number to determine the percentage of the total that your images represent. (If you have 1,000 images and you divide 686,507 into it you will get 0.0014566.)

    2 - Multiply $453 million by your percentage. ($453,000,000 X 0.0014566 = $659,839.98)

    3 - The $659,839.98 represents the average total revenue Getty would receive in a year from licensing rights to 1,000 images on their site.

    4 - Now, you need to make an estimate of average return per image you are receiving based on your contract and the percentage of your sales that are made "in your home territory" (40%), or "outside your home territory" (30%). For the sake of this example I will assume 35%. Thus, $659,839.98 X 0.35 = $230,943.93. This would represent the total that the average photographer with 1,000 images on the site and earning 35% of sales would have received in the last four quarters.

    5 - If your revenue is higher than this you are doing better than the average. If your revenue is lower then you're not doing quite as well as the average.

    A couple other things to think about:

  • In the last quarter the amount Getty paid out to RM image suppliers averaged 32.6%. The amount paid out to RF image suppliers averaged 24.1%.

  • Some photographers might ask why I haven't recommend doing different calculations for RF and RM images. Their assumption is that the average return per image for RM would be much higher than RF. In fact the difference isn't as great as they might expect. In the last four quarters the average-return-per-image from RF single image sales was $634.63 per image and the average from RM was $673.54. The minimal difference is because there are significantly more RM images than RF on the site, so even with much higher RM revenue the averages-per-image are about equal. Remember also that the RF sellers get additional revenue from disc sales that are not included in these single image figures.

      (The number of images used to calculate the averages is the total on the site at the end of the period. Thus, since new RF and RM images were being added throughout the year neither of these numbers are totally accurate based on the number of images on the site at the time of any individual sale. However, the relative relationship between the two numbers - which is the significant point here - should be relatively accurate.)

    Stockphotofinder Update

    In the first month after their soft launch www.stockphotofinder.com has uploaded more that 400,000 images and signed 30 agency image providers. Many of these providers still have significant numbers of images to upload. In addition, negotiations with a number of additional providers are in the works.

    So far the site has had more than 10,000 unique visitors. They are getting visitors from 300 different ISP's per day and delivering 2,500 page views per day. And to date, they have delivered more than 4,000 click-throughs to their agency suppliers. With each click through the customer goes to one of the 30 agency sites to view a preview size image. From there the image supplier, not Stockphotofinder, handles all the negotiations, fulfillment and collection and retains 100% of any fee negotiated.

    Stock Agency Costs

    According to an analysis done by Bahar Gidwani, CEO of Index Stock Imagery, on his blog www.dimdump.com the average operating costs for five traditional agencies with published numbers is about 70% of revenue. Thus, to make money the agencies must pay out less than 30% to their artists.

    He indicates that an agency paying a higher percentage is likely to lose money, at least some of the time, unless they can squeeze their costs.

    He also points out that an alternate model that seems to be working better for some agents - although it may be worse for artists - is "wholly-owing" the images. In these cases the agent hires photographers to produce images and owns the content. While the agent's operating costs may be just as high as traditional agencies, the low commission payout gives them room to make a respectable profit.

    Gidwani says, a few agents claim that their "fully-digital" model allows them to have low operating costs and high payouts to artists, but the publicly-available information on such models is slim. He feels that generally companies will find that operating costs are higher than expected and revenue lower due to lower volumes of images licensed.

    To read the whole story see Analysis #10 - "Is Digital Good for Stock Agencies?"

    Earnings From Reuse Fees

    One of the elusive questions in the stock photo industry is how much revenue is earned from re-use fees. Most agencies will say such fees are a very important part of their revenue, but seldom has anyone provided accurate numbers.

    Bahar Gidwani, CEO of Index Stock Imagery, has examined his customer's behavior over the last four years and determined that on average the additional revenue generated through reuse of images licensed to rights-managed customers is about 25% of the fee charged for the initial license. In Index's case almost half the re-uses occur within the first six months after the initial use. A second peak in reuse comes about a year after the start of the initial license.

    For the full story see Industry Comment #7 - "We Like Reuse Fees" at www.dimdump.com

    Creatas Adds India Culture and Lifestyle Images

    Dynamic Graphics Group, has recently added 158 single images to its Creatas royalty-free content brand that were shot specifically to capture the "Bollywood" phenomena that has grown in popularity in the U.S. and around the world.

    Stylized photography that reflects India business, lifestyle situations and the global marketplace were shot over three days with cast and crew of over 50 people using 10 individual set designs. The shoot resulted in the creation of two unique Creatas brand CDs: Bollywood Express (80 images) and Bolly People (65 images).

    "The brightly-colored costumes and actors and actresses seem to have stepped out of a movie," noted David Moffly, CEO of the Dynamic Graphics Group. "They are perfect images for anyone needing to portray the 'Bollywood' trend or to reflect the Indian interpretation of technology and lifestyle situations."

    These "Bollywood" images are available online now through PictureQuest
    www.picturequest.com and

  • Copyright © 2004 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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