Deconstructing Gary

Like most of you, I assume, I watch the video of Gary Shenk , CEO of Corbis, at the Reuters Media Conference. Like most of you , I read comments about it almost everywhere, as it is one of the rare exquisite time when the privately-own company makes public comment on itself.

Here is what I heard and understood. Please correct me if I am wrong.

- Corbis launches free photo to use by bloggers. Using the Piccap application, still in private Beta and being tested with Getty Images as we saw on this blog earlier, I am surprise at the announcement. When you launch a product, usually, it is ready. Or available. This one is for exclusive members only. Furthermore, if you are an industry watcher, you would have already probably noticed that this is nothing new: Mochila has been providing this service for a while now, with images from Getty, AP, Zuma among many photo agencies. The difference here is that Corbis is on its own independent route. Very well.

But with revenues from advertising fees being split three way, what will the photographer see ? 30% of $0.01? Ouch ! Where are those SAA storm troopers when you need them ? Really, the only images Corbis could put up is some RF, including Snapvillage. How so very exciting for bloggers looking for the latest Paris Hilton? Red Carpet photographers beware !! After In Touch, here comes Corbis. Its the low pricing x huge volume theory again: The agency wins, not the photographer.

- Avatars of the world, Beware: Yes, Gary Shenk is very proud of his little gallery on Second Life.”the first in the industry” he says with a smile of a proud parent. We are all thrilled !!! What can I say more on that subject?

- The verge of profitability: Ya, ya, we know. We are still waiting. But here is the real killer part : “Shenk said the company was already profitable before accounting for nonrecurring costs, including some severance expenses and investments in its technology infrastructure. ” So, if you take out the cost of acquiring Veer, the cost of creating Snapvillage, the cost of the 300 people they had to fire ( imagine, not only they were useless when they worked there, but they even bring the company down when they are leaving. How unprofessional of them), and other “nonrecurring cost”, Corbis is making money. Hey, if I take off my nonrecurring costs, like buying my house, or paying for college inscription, or buying a car and more, I am a freakin’ billionaire !!! Nonrecurring costs are an integral part of doing business, not an option.

-” we are number one in editorial” : Where ? On what planet? I look at magazines here and international. I hardly see the Corbis credit. I would love to see the hard numbers to justify such a statement.

I think we would love to see some more down to heart reporting one of these days. If Corbis wasn’t own by Bill Gates, no own would ever accept such fantasy updates from any company. There is such an acceptance, in this industry, of Corbis spin message that no one, but me it seems, reacts. And what is this with Corbis being number 2 agency in the world ? Corbis is not profitable. That puts them in the bottom 10. Any agency can be number one if profit is not an issue.

JupiterImages is number two, and by far. It turns in a healthy profit.

Falling down the stairs

I now have the proof that photo agencies are their own worst enemies.

A very succesful consumer magazine has send a blast email to its photo providers to announce a reduction in its licensing fees.

In Touch magazine, a Bauer publishing-owned celebrity magazine , who has a paid circulation of between 750,000 to over 1 million copies a week, and according to a press release from 2006, “In Touch Weekly’s circulation is at an all-time high of 1.1 million and the title has the fifth highest newsstand sales among consumer magazines. In Touch Weekly also posted a 35% increase in advertiser demand over last year and was recently named to Advertising Age’s “A” List”, has decided to reduced its page rates dramatically.

In a continuing effort to reduce costs against a very aggressive competition ( People Mag, US weekly, Star, Entertainment Weekly, Celebrity Lifestyle, National Enquirer , etc ) it has started to ask for bargain images. In an email send to their regular contributors, InTouch lists the new pricing versus the old, and a list of agencies who have already agreed to the change. The Motto is always the same. If you do not accept our new pricing we will no longer use your images since we have all these other agencies who have already accepted. Its peer pressure.

Just as a reference, I took the full page rate, that used to be $500 and now is reduced to $300 (That is almost a 50% cut) and checked the rates proposed by others, not on the list. I thus went to different website, selected a random red carpet celebrity photo of the type used by InTouch and used the online price calculator. I agree, yes, very unscientific.

From Getty Images, with no Electronic rights, I got : $ 475.00 USD

(disclamer: Getty might be licensing images to InTouch via their subscription model which is flat yearly fee for “all you can eat” images. It would probably put the price of one image to sub $100. )

From Corbis, I got ” An unexpected error has occurred. ” Corbis screenshot

From Alamy, It was US $ 535.00

From the new Photoshelter collection: USD $ 735

From Shutterstock ( yes, they have some celebrity red carpet, albeit, not very good): $199 (if you subscribe for a month)

Other microstocks did not appear to be in that space.

So what is the lesson here ?

-Photo agencies that have agreed to the price cut had no business reasons to do so.

-They will obviously not see an increase in usage to compensate for the lost of revenue.

-They have applied the “copy and save” strategy. Copy my neighbors and save what I have by any means possible.

-They are shooting themselves in the foot with a Bazooka.

- This list and pricing will now be shared with all other competing magazine who will feel obligated to institute the same rates.

- I doubt that they these agencies have consulted with their photographers regarding these rates thus passing the “savings” to those in the field.

- These prices have no chances of going back up. A variation of Newton’s law apply here. What goes down goes further down, not up.

Because I respect these agencies’ right to do business, I will not publish the list publicly. Here is, however, the InTouch new rates as they have appeared on the blast email:

THE NEW RATES FOR THESE AGENCIES ARE:

FULL 400
¾ 300
½ 150
1/3 100
¼ 75 (Agency A 100)
SPOT 50

OLD RATES:

COVER 1250
CV INSET 375
FULL 500
¾ 400
½ 350
1/3 250
¼ 175
UNDER ¼ 150
SM SPOT 75

As a conclusion, I would like to add that this pricing pressure has not been brought forth by microstock, as they do not offer the same type of content. This is the result of too much similar offering of the same type of material by agencies who believe that quantity will somehow compensate for quality. It is something I wrote about earlier in a post called the big depression of 2007. It is also not limited to celebrity editorial and we should soon see the same downward slip replicated very quickly everywhere.

The cost of doing business

There are some that still combat royalty free in what seems to be an unfounded hope that it will disappear. Others that turn a blind eye towards microstock and its user generated content. If I can’t see it, it doesn’t exist. Then, there are those who strongly believe that this whole technology thing is just a fad and sticking with the old fashion way of doing business is but the obvious way of doing it.

And all this while, image buyers are having a field trip. More choices, a huge and illogical range of pricing structure, extremely isolated image suplliers competing in tight corners. It is a good time to buy images or rent a photographer. I would even say, it is the best of times. You can get really great images for a bargain these days. The photo industry is so focused on survival rather than growth, on retention rather than expansion, that it has adopted an “any sales is better than nothing” attitude. And that means accepting any prices given to them.

It has also put then in a no investment position. Many agencies or independent photographers do not even want to consider cost saving solutions as they do not feel it is the right time to spend money. They are not willing to analyze their work flow in order to reinvent the rules.

It is quite ironic, since this industry was created by risk takers. From the crazy photographers who picked up a camera in the early 50’s and decided to sell their images to the crazier day dreamers who brought them together and build the first licensing offices. From its inception, the photo industry was lead by wild innovators with a sharp sense of business. The photo industry owes its phenomenal growth to those who chose to do things a different way. To those who did not believe in rules.

Today, its the “copy and save” model. When you introduce anything new in this business, the first question you get: is my neighbors doing it ? or my competitor ? if not, than why should I ? The second is : How much will it cost me ? It is never, ever, how much will I save or better yet, how much more revenue will it generate ? and the final one is always the killer : Can you give me some numbers to prove it ? An example ? I love this one the most because it puts the burden of running the business on the solution provider, not on the business owner.

The underlying thinking is that you do not invest in anything new unless someone else has done it before you and proved its success. In the mean time, you keep with the the status quo and desperately try to protect your business from others. Thus, the “Copy and Save” model.

If NASA had waited for an example to walk on the Moon, we would still be waiting. Do we really think that Apple, who everyone admires, really had accurate projections for its Ipod and Itunes?

Japanese archers never need to check their targets after they shoot arrows : If the movement, the position, the aim and the equipment’s is perfect, the arrow will most certainly hit the bullseye. The outcome is defined at the moment the arrow leaves the bow, not when it hits the target. At the instant the archer lets go the arrow, the outcome is already obvious.

Most business owners wait for the arrow to hit the target to see if they succeeded. They seem to hope that, regardless of their aim, there is some magical interference that will happen in between them releasing their arrow and the bullseye. They repeat it over and over in the hope of scoring a hit. The result, for them, is the justification of their action. They do not realize that the action justifies the result.

The photographers that succeed, and the photo agencies that grow are the ones that constantly innovate and master their tools. The ones that go with the gut feeling and the instinct. The ones that smell good ideas million of miles away and focuses on the benefits, not the costs.

There are great products and solutions on the market right now that can make an agency or photographer highly competitive for the next 5 years. Some have already adopted them and are reaping the benefits of being early adopters.

The rest are still busy waiting for the next industry meeting to see if it is really worth it.

Have yourself a merry and jolly Christmas

    In what has become a holiday tradition, and right before bonus time, Corbis has laid off another round of staffers. After all, it is not the fault of management that they are not profitable, it was those 285 slackers that they finally found sleeping at their desks. 160 where found just before the summer break and 125 where recently found after they have be caught shopping for turkeys instead of selling image.

Who hired them in the first place.  And if they are so useless, why ?

In a contradicting announcement, “A Corbis spokesperson says the company will close eight of its 24 offices by June 2008. Offices are closing in Amsterdam, Brussels, Hamburg, Madrid, Chicago, Montreal, Melbourne and Singapore.” while Gary Shenk says “To intensify its focus on the commercial and editorial imagery markets, the company will also deploy highly-connected in-the-field business development teams in most major advertising and media centers in Europe, North America, Asia and Australia, expanding its current market-reach.”

Isn’t Amsterdam, Hamburg, Madrid in Europe ? and Melbourne in Australia ? what about Singapore, isn’t that in Asia? And finally Montreal and Chicago in North America ? So they are closing 8 offices in areas where the will deploy “highly-connected in-the-field business development teams”. What are those, homeless workers with bazookas ? I can just picture a team of guys in suits walking in a wheat field with funny hats and an old rifle that shoots Cat5 cables.

Furthermore, Corbis re-institutes the American corporation dream of the 1990’s, “The new multi-lingual contact centers”. Why bother having presence in these countries when everything can be done from New York and London ? After all, a British guy, with a Dutch flag on his pin board, can sell images in Holland . He just needs to speak Dutch. After all, Europe is just one big country with different languages, like Asia. And they all need the same images.

In the tradition of “if it works for me, it has to work for you”, Corbis has decided it would be cheaper to have as few sales centers as possible while dispatching an army of office-less workers to convince clients to work their way. You need a picture, call someone somewhere that speaks your language. That should work. The question then becomes, why London and New York ? After all, the workforce is much cheaper in India or China ? or Ireland ?

“Corbis will maintain salespeople who work from home in these markets, as well as several others including San Francisco, Atlanta and Dallas “. Oh right, it is those office rents that are bringing the company down. Let the employee pay their own rent and you don’t even have to call security when you fire them. That will be a cost saving item. But lets keep having lavish parties every time we bury a collection, like we recently did with Sygma.

Poor employees. One could expect Getty Images not to be too far, as well as JupiterImage . We won’t even mention the ever shrinking A21 group. For some reason, it is always the fault of the employees that things go wrong, never the management. After all, if Getty’s stock has fallen to such a low, it must be because the staff just doesn’t get it. It is certainly not the fault of J. Klein, Mark Getty ( is he still alive or is he pulling one of those Howard Hugues “I am hiding in the penthouse of some Seattle hotel” thing ?) or even Nick Evans Lombs.

And the holiday season is such a great time to let people go so they have more time to worry about their future with their families, while they stare at a terribly empty Christmas tree or Hanukkah bush. And they can think about, if only they had worked so much harder, the company would have done so much better and they wouldn’t be jobless.

You have yourself a nice and cozy Christmas, Mr. Shenk, while you and your family finally have time to visit the Corbis photo gallery on Second Life. and don’t you bother coloforful stickerman, who seem to use Corbis as a platform to promote his book and see how many people can stand up in one room.

Posted in No sense, Jupiter, finance, transaction, corbis, getty | Edit | Print |

The Death of Citizen photo journalism….

We all know that black and white, Holga / Lensbaby enhanced (?) with a touch of personal sensibility photo “journalism” is a dying breed (thank G~d !) and that it has created in its wake a lamenting song of despair : Photojournalism is dying. Well yes, bad photojournalism, the one that desperately tries to mix art and journalism into “made for museum” photography certainly is, if it ever lived.

These ” I have smoked too much pot ” exposes of blurry, highly grainy ( I don’t shoot digital, digital is for the common man), insufferably pretentious images that make great conversation pieces at photo exhibitions or gallery opening. They have hurt the photojournalism community, desperate for anything original and new, at the expense of real reporting. Cameras, unlike paint, were invented to replicate reality, not alter it.

In the midst of this current debacle of pro photojournalism came the Web 2.0 preachers of community driven content. Crowd, they say, is the new journalist. The masses are everywhere and equipped with cameras, whether in cell phones or in point and shoot. It is multiple eyes everywhere rather than two somewhere.

Furthermore, technology had made the idea very simple, and cheap, to create. For about $300, anyone can purchase an off the shelf package that will manage a fully functional image database. The rest is wait and see. And so we wait. and wait. And as of today, we are still waiting. For numerous reasons.

One source : A citizen photojournalist site would make sense if there was only one. Photo editors could immediately add it to there daily scouting and verify if anything of interest has been put up. There are so many of them today, including Flickr and other photo sharing sites that it becomes impossible to find, if it exists at all, the right image. It is almost like knocking on everyones door and asking if they have an image. Extremely laborious and completely counter productive.

Training: when I hear an explosion or shooting, I duck and protect myself. I do not take pictures. A pro, on the other hand will do the opposite. Immediately. You cannot learn this type of reaction. And once I am finished protecting myself, I will look at what happened, not take pictures. I will only take pictures when I feel perfectly safe, which is, as far as news is concerned, too late.

Composition : There is story telling in photo journalism. There is investigation. there is composition. Trying to explain in one image a situation is as hard as writing a full length article, if not harder. A pro has an audience in his/her head and shoots to explain. You need to take an event and bring it to someone who wasn’t there as if he was. A passer-by will take a picture of whatever is burning, moving or looking odd. His/her audience is himself. It has the same attention then a dog.

Editing: Albeit probably helped by the sites owners, an amateur has no clue on what sells. Nor will they ever. A pro is always confronted to news event.An amateur, maybe once in their lifetime. How do you want them to know what images to send ? A pro looks at what has been published and what hasn’t. A happy snapper couldn’t care less, unless if he or she witnessed the event.

Rewards: With CNN, Msnbc, ABC.com and so on urging their readers to upload images directly to their site with absolutely no other compensation then to see their images published, photocitizen are also being lured away by publishers.

Finally, and this is probably the main reason we are seeing this stillbirth, Photo agencies have always been in the business of recuperating images of amateurs that have worthwhile pictures. Some even have full time dedicated people just in charge of doing these pick ups and quickly securing exclusive rights. Unlike to Citizen journalist site that wait and hope for a great image to come up, agencies will invest time and resources in finding these images. There is no competition there as web 2.0 community sites have none of this knowledge and capability. They sit and wait while their source of income is being professionally poached by smooth operators.

So what do we see on these sites ?: a lot of images of car crash ( always a winner in an amateur’s heart), bad images of celebrities at a restaurant or nightclub, fires, lots of fires, and other useless images. The junk of citizen photojournalism. All this spread out over hundreds of “use me” websites. Even if these sites would follow the microstock model of charging a penny an image, they would still not work as no one needs these images.

So, we can safely predict that citizen photo journalism will be the first to blow when the web 2.0 bubble explodes.

So far away from it all

Not a good time of the year for those of us who are not playing the stock market. All the photo news site change (or is it because it is Halloween ?) from photo buffs to Wall Street experts. Some stayed up all night to be the first to report while others where updating their blogs while listening in. One would have thought a man was landing on the Moon. The giant has stumbled, they say, some even predict its imminent downfall, the lilliputians have finally won against the big bad Gulliver of photography. Getty released it quarterly report.

I personally see a company who keeps on growing, on generating more revenue than any other photo agency in history, that is not afraid to innovate and to take risks and who is now about to redirect its general focus to bypass its own clients to reach its consumers directly. Something I mentioned in Photo agency 3.0.

Hint: It is not because a company’s stock drops that it is out of business or will be. Take a look a Microsoft stock once in a while.

Anyway, while Gulliver scares the pants out of the Wall Street-obsessed lilliputians, its shadowy friends, Corbis the Corbis ( how else to describe them ?) have again taken the world by surprised. A few months after launching Snapvillage.com, they have posted a new contributor agreement, effective August 31, 2007, but only posted a month later, on September 27. Most of the contract is all about changing the legal name of Snapvillage, and adding some very threatening comments that is not particularly contributor-friendly. One would think that if you have a UGC company, you would have an agreement that doesn’t scares the pants out of those Users. Corbis is afraid of no one, not even its own contributors who find themselves forced to fly to Ireland if they need to sue Snapvillage and pay all legal fees even if they win. Furthermore, the agreement makes no efforts to be readable by the common man. Quite the opposite. So much for being user friendly.

However, the really interesting part is that the whole company has been legally moved to Ireland, under a shell company:

SnapVillage Ltd.
Attn: Matsack Trust Limited
70 Sir John Rogerson’s Quay
Dublin 2
Ireland

The Matsack company websites clearly specifies : Our in-house company Matsack Trust Limited acts as Company Secretary for several hundred client companies, comprising public, private, unlimited companies …

Mmm…Now everyone knows that Corbis will do anything to protect its very wealthy and only stockholder, Bill Gates, from any possible liabilities. Fair enough. This agreement does not even mention Corbis at all. But Ireland ? and a empty company ? Well, an article on the American Chamber of Commerce explains it all :

“These [benefits] include Ireland’s open and transparent tax regime, a standard 12.5% corporation tax rate which applies to all companies. Equally important are the double taxation agreements with 44 countries and the favourable [sic] tax incentives given to intellectual property and to Research & Development investment. ”

A tax shelter. Apparently, Corbis’ idea of making a profit is to pay less taxes overall, and none in the USA at all.

Talking about contracts, I was lucky enough to see the one offered by Moodboard ( the one with the cool website). It demands, from a professional photographers, a 10 year, worldwide exclusive agreement with a 20 % pay off.

Even the sleaziest microstock agreement does not fall that low. What is it, I must ask, that Moodboard does with these images that justify them to take a whopping 80 % ? We are talking about images that they have not produced, paid for, arranged, edited, or even captioned and that they intend to license at a midstock price. And who in their right mind would ever sign this ? Where are the EPUK guys when you need them ? The SAA , ASMP and other “P” named association ? how can they tolerate this under the same Union Jack flag ? What is the Queen doing about this ?

Posted in Midstock, license, No sense, finance, getty, corbis, Royalty free