Corbis, Zefa and More . . .

Stock Asylum Staff Report


Corbis, the world's second largest supplier of stock imagery, has lately been working very hard to improve both the reach of its market presence and the depth of its visual offering.

The Seattle-based company recently announced the acquisition of German stock supplier Zefa Visual Media Group, the opening of a Canadian office in Montreal and a "rights-representation partnership" with Marvel Enterprises, Inc. Under the Marvel deal, Corbis will license digital images of comic book super-heros from Spider-Man and the Incredible Hulk to Elektra and the X-Men.

The Marvel deal is similar to one struck in November with Andy Warhol Foundation for the Arts under which Corbis will license and distribute digital versions of Warhol's art.

                        

The Montreal office opening and the Marvel deal were announced at the Corbis annual meeting in January. Corbis also announced at the meeting that 2004 revenues totaled $170.4 million, an increase of about 22 percent over 2003 revenues. The company said it expects to have a positive cash flow from operations for the first time this year.

Corbis said it hired Tina Poitras, the founder of Magma Photo, to lead the Montreal office. The Magma web site now redirects users to the Corbis web site. Magma specialized in images of Canada and general lifestyle photography.

                        

Financial details of the Zefa deal have not been released.

In jointly issued statements, the two companies said that Zefa operations, including its web site, global sales and marketing will be integrated into Corbis over this coming year.

Corbis Spokesman Dov Schiff noted that Corbis has a "single-brand strategy," meaning that the Zefa name will probably disappear eventually.

"I can't say exactly what this will look like, but eventually you will probably see a full integration of the brand," Schiff said.

                        

In the meantime, Corbis said, Zefa customers will continue to deal with their existing sales representatives and will use the existing Zefa web site. It will be mid-year before Corbis starts integrating Zefa images into the Corbis web site, the company said.

The company promised no changes to Zefa web site accounts without first notifying customers. It said all changes will be made "in accordance with the highest standards for security and privacy."

As for Zefa photographers, Schiff said Corbis will honor all existing contracts, but might ask that photographers sign Corbis agreements as their Zefa deals expire.

                        

Zefa president Erwin Fey, who is largely responsible for building the Zefa brand in recent years, will move into a consulting role with Corbis while Zefa CEO Thomas Speight becomes a vice president, leading international operations and expansion activities.

For Corbis, the world’s second largest distributor of stock images after Getty Images, the acquisition will greatly improve the company’s presence in the critical European markets where Zefa is strongest. Corbis also benefits from the acquisition of Zefa’s file of 7.5 million images, 450,000 online. Many of these images are suited for high-end advertising and design.

The Corbis collection is widely seen as stronger in editorial photography. Corbis owner, Microsoft founder Bill Gates, has stated that Corbis could make a public stock offering within ten years. Acquiring Zefa makes Corbis more diverse and, thus, more attractive to potential investors.

Zefa, has been reported for sale for several months, with Corbis and Getty Images the primary bidders. Corbis emerged as the main bidder about two months ago.

                        

Based in Dusseldorf, Germany, Zefa was owned by Fey and 3i London, a private equity group. Fey, who was in charge of the company’s product and strategic development, owned 51 percent of the company.

According to published reports, Fey and 3i bought Zefa for about $7.4 million (six million euros) in 1998. Zefa is said to now be worth about $110 million ( 90 million euros ) with annual sales around $41 million in 2004.

These figures made Zefa the third largest seller of stock image licenses, ahead of Amana, the Japanese owner of Photonica and Iconica. Amana claims about $30 million in annual stock image sales, but also has a robust assignment division that accounts for more than $35 million in revenue each year.

Even with Zefa's acquisition, Corbis remains a distant second to Getty Images. Combined Corbis-Zefa revenues in 2004 were $211 million, roughly one-third of Getty’s $622 million in 2004 revenues.

Schiff said Corbis did not purchase Zefa specifically to compete with Getty Images.

"I think the approach we took was, 'How will this help us serve our customers?'" Schiff said, "Not, 'How will this help us compete with Getty?'"

The Corbis spokesman said his company would consider additional acquisitions, but is not in a "heavy acquisition mode."

                        

The Zefa acquisition comes after a year of considerable consolidation in the stock photography industry ( see: Recent Consolidations May Have Major Impact ). In 2004, Veer purchased Solus Images, a21 bought Superstock, PictureArts acquired Nonstock and Jupitermedia bought both Comstock and Thinkstock. In addition, Getty Images recently purchased E-Lance Media, a German distributor of news, sports and entertainment photos. Getty also recently purchased Image.net, which distributes publicity and marketing materials.

Zefa owned 16 subsidiaries around the world and established a network of 70 “sales partners” who license rights-managed and royalty-free images from Zefa's libraries. Zefa has 140 employees.

Corbis is at: http://www.corbis.com

Zefa is at: http://www.zefaimages.com