Corbis to take 'microstock' plunge

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"Right now the microstocks are still operating as mini-Corbises and mini-Gettys, selling into a very low end of the professional market," Shenk said. "The big opportunity is finding a much broader customer base--people who may never have bought a picture before (such as) kids putting pictures in school reports."

Fending off competitors
But what about being eaten up by the little guys, or in iStockphoto's case, the little guys backed by big guy muscle? In some areas of the technology business, companies that build a business selling lower-end products can dethrone companies with higher-end, higher-cost alternatives, as chronicled in The Innovator's Dilemma by Clayton Christensen. Shenk doesn't believe Corbis is vulnerable, though, when it comes to stock art.

"It's much harder to start at the bottom and work your way up," building a sales force to target big ad agencies, creating effective search technology, assembling a consistently high-quality portfolio and ensuring rock-solid copyrights and model release rights. In contrast, he argued, "For us to launch a micro site, that's relatively straightforward."

The other threat is whether cheaper sites will gobble up business by luring away otherwise high-paying customers. Shenk's counterpart at Getty, CEO Jonathan Klein, thinks the issue is legitimate but minor.

"I think cannibalization is a fact of life--and completely overblown," Klein said. But in a reference to the iStockphoto acquisition, he added, "If I have to be cannibalized, I'd rather cannibalize myself and find a new customer base."

Shenk agrees that microstocks generally involve new customers. "Nine out of ten customers of microstocks would never contemplate (buying) a picture at Corbis or Getty. The vast majority of microstock customers haven't even heard of Corbis."

The cannibalization issue may be slight, but the flip side is that Corbis can't benefit from a well-recognized, trusted brand.

Bruised business
Gates' initial vision for Corbis was a supplier of images people could display on flat-panel screens he imagined would festoon homes. Indeed, Gates' house has many such screens, though the controlling software is in need of an upgrade.

To that end, the company bought rights to "iconic, historical and celebrity" images, Shenk said. Classic photos of Marilyn Monroe and Albert Einstein are in the collection.

"Fifteen years later, that model is starting to emerge," Shenk said, though so far mostly on the tiny screens of mobile phones, but in the meantime, Corbis has struggled financially.

Though the Seattle-based company has 1,100 employees in 24 offices in 16 countries, and though its revenue increased 11 percent to $251 million in 2006, Corbis remains in the red.

To cut expenses, the company is installing a new accounting and business operation system that will gradually unify the computer infrastructure across the 27 different companies Corbis has acquired. And it will overhaul its Web site to make e-commerce easier and less expensive, he said.

And to increase revenue, the company has three main thrusts. The microstock push is one, but, Shenk predicted, "For the next few years it will be a sliver of our business."

More significant in the near term will be the rights services business Shenk led within Corbis, in which the company handles the chores of acquiring images such as songs or artwork used in advertisements and movies. That business accounted for about 20 percent of Corbis' revenue in recent years, Shenk said.

And for licensing its photography, the company is expanding its focus from editorial buyers such as the news media to the larger market of commercial buyers such as advertisers. There, Corbis will take on its larger rival more directly. "Getty is in the sweet spot, and that's where we're going now," Shenk said.

And though microstock appeals to some commercial buyers, such as those who produce annual reports and PowerPoint presentations, Shenk believes all the emphasis on microstock has distracted competitors from more lucrative customers.

"While other companies are racing to the bottom of the market," Shenk said, "we're capturing a lot of share in the large, commercial part of our marketplace."