In April, Corbis announced that Gary Shenk , company president, would become the new CEO effective July 1, 2007, and that all Corbis officers would begin reporting to him as of the date of the April announcement. Steve Davis, the current CEO, is transitioning out of his day-to-day operational role to pursue new leadership opportunities in the public service and philanthropic world, but he will also continue to serve as a senior advisor to the company.
Recently, Mr. Shenk took time out of his busy schedule to answer a few questions for Selling Stock . He shared some of his thoughts on where Corbis and the industry are headed.
JP: If photographers want their images seen by customers, it has become more and more important to get the images on a major portal. Currently there seem to be four ways to do this:
1 – submit images directly to the portal and offer them on a royalty basis;
2 – submit images to a small agency that has an “Image Partner” relationship with at least one major portal, maybe several;
3 – join an elite group of photographers to form a production company such as Blend or OJO that can place the images with several portals;
4 – do contract assignments for one of the three major portals where the photographer is paid a flat fee and the portal wholly owns the production.
Which of these four methods produced the most new images for Corbis in 2006? Please list in order.
GS: We are getting images in exactly the order you listed. We get the most images via process 1, the second most via process 2, and so on. I should footnote that excludes news images. We get a large quantity of news images from two major partners: Reuters and EPA, and we get a lot of news images daily from contributors. If I were to include that in this equation, then the amount of image partner pictures would go way up, but I am excluding that. Excluding news images, the order is 1, 2, 3, and 4.
JP: Is there an advantage for photographers who produce commercial images to offer images as RF rather than RM or does it make a difference?
GS: I think the RM business is still very robust and the amount of value in Rights Managed is still higher than the amount of value in RF, so I would encourage photographers not to walk away, by any means, from the RM model, but embrace it. And I would encourage photographers to embrace RF as well. In this industry it’s a mosaic of models that is creating the revenue right now. If photographers want to diversify their risk, they should play in as many models as the can, but RM is still the biggest category of our industry so they should not walk away from that.
JP: The number of units licensed as RM is not necessarily the biggest, but it may be the biggest in revenue.
JP: Corbis is starting from a fairly low base in RF revenue compared to RM. Is your RF revenue growing faster than your RM?
GS: Our RF is growing considerably faster than our RM. It still represents a minority of our overall licensing revenue, but it is growing the fastest of all the categories.
JP: How many RM images do you currently have in your online database?
GS: We have about 4.1 million images that are currently online and digitized, and approximately 80 percent are editorial and 20 percent commercial.
JP: How many RF images do you have?
GS: We have about 500,000 RF images.
JP: How many commercial images do you expect to add in 2007?
GS: Excluding the news we’re bringing in between 150,000 and 200,000 images annually.
JP: What percentage of that will be wholly owned? Are the majority of the images you are adding wholly owned?
GS: I’m not going to release that number, but it is a minority.
JP: How important is it for Corbis to have exclusive rights to a particular commercial image?
GS: I think that Corbis competes effectively on a lot of different criteria. We have the best customer service in the business, we have a global brand, we have a Web site that works everywhere in the world, and people turn to Corbis for a lot of reasons. So even if an image is not exclusive, we still are likely to get a customer’s business because they like dealing with us on so many different levels. Certainly having an image exclusively gives you something else that a customer has to turn to you for, but you end up paying for it in some way either through guarantees or higher royalties. We always balance that and by no means are we tied to being exclusive with our partners.
JP: And that includes individual photographers?
GS: We often work with individual photographers on an image exclusive basis. We do not try to be the sole representative of a photographer. We don’t want the images the photographer submits to us to be on multiple portals, particularly for our better RM photographers. But, we’re not in any way locking them up to only shoot for us.
JP: You’ve indicated that Corbis intends to have a new offering that is competitive with micropayment. When can we expect to learn some more about that?
GS: Before the end of the second quarter, which is less than one month away.
JP: Do you see any advantages to a pricing model similar to Getty’s RR?
GS: Yes and no. On the one hand you are always looking for different ways to price that might be more attractive to customers. On the other hand I don’t think you can judge the success of that particular licensing model without looking at how the whole of RM plus RR is behaving. If RR is going up and people are licensing more RR, but at the same time RM is decreasing and more than offsetting those gains then I’m not sure that is necessarily a successful model. What we at Corbis are trying to do is maximize the overall revenue for photographers and not create excess customer confusion. I think you have to look at the whole picture and if one model is growing at the expense of others then it is not necessarily a great model.
JP: Many photographers are seeing their return-per-image fall and thus are pulling back on speculative production. They are either turning to more wholly owned shoots, or transitioning into lines of business other than stock photography, or at the very least expecting stock photography to be a much smaller portion of their total business. Do you see this trend happening among your photographers?
GS: We’re trying to champion revenue-per-image at Corbis. That’s one of the key things we focus on and we’re taking a very highly filtered look at our collection. Right now we are in the process of trying to edit a lot of the older imagery out of the collection that hasn’t been selling and continue to increase the opportunities for new imagery to come into the collection.
There is so much imagery being produced right now. But we still think there is a huge value in delivering quality and a highly filtered search experience. On many sites that are gaining some headlines these days the search experience is awful because there are so many pictures that are being submitted without any filters whatsoever. After long, hard and deep search you may be able to find the picture you need, but most people in the creative advertising market don’t have the time or the desire to do that. So we’re continuing to take a highly filtered approach to our collection. I would say that RPI at Corbis is moving upward and that continues to be our intent. We haven’t seen a huge unwillingness of photographers to fund shoots because we are trying to deliver higher returns for them than they’ve gotten in the past.
JP: What percent of total industry revenue do you think comes from sales to major advertising agencies?
GS: I think overall 75 percent of revenue comes from commercial markets such as advertising agencies, graphic design companies or corporations and 25 percent comes from editorial — publishers, newspapers, magazines. You said major advertising agencies and that is a good question that no one knows the answer to exactly. But still in Corbis’ opinion about 75 percent of the commercial revenue comes from larger, more established agencies that are regular buyers of stock as opposed to small one-off transactions.
JP: Obviously, some of the big publishing firms interested in editorial imagery are major users of Corbis images.
GS: Right. That’s good news for our industry, because the larger companies are very robust in their demand and in their desire to work with big partners meaning that they want agreements, they have heavy rights requirements, they don’t want a lot of risk, they want good customer service. So all of that plays well for the bigger agencies to keep that share of the business. At the same time those customers are all moving to interactive (Internet) use as their number one type of use. Education companies and publishers are looking at interactive as a major format for their product. Advertisers are looking at interactive as the lead advertising concept. I think the agencies will still have huge opportunities to be the dominant supplier to those bigger customers, but we all have to be able to supply their needs in the Internet space.
JP: What percentage of your gross sales are for editorial and what percentage are for commercial?
GS: The majority are for commercial. Corbis’ intent is to move to that mix of 75/25 over time so that we mirror the marketplace, but right now, given our editorial history were not weighted that heavily toward commercial, but still the majority of our licensing is commercial.
JP: Thank you for your time.
[tags]Gary Shenk, Corbis, Jim Pickerell[/tags]