Corbis Corporation

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Corbis Corporation

15395 Southeast 30th Place, Suite 300
Bellevue, Washington 98007
U.S.A.
Telephone: (425) 641–4505
Toll Free: (800) 260–0444
Fax: (425) 643–9740
Web site: http://www.corbis.com

Private Company
Incorporated: 1989 as Interactive Home Systems
Employees: 550
Sales: $30 million (1998 est.)
NAIC: 51331 Wired Telecommunications Carriers; 514191 On-Line Information Services

Corbis Corporation provides digital images to professional and nonprofessional customers through a handful of Web sites, licensing its collection to users for personal use and for reproduction in a variety of print and electronic media. Corbis controls the rights to 65 million images, which the company scans into digital form for display and purchase on the Internet. Included within the company’s vast holdings are images from a number of highly regarded collections, including the National Gallery of London, the State Hermitage Museum in St. Petersburg, Russia, and the Bettmann Archive, and from several renowned photographers, such as Ansel Adams and Jack Moebes. The range of the company’s visual content attempts to encompass the breadth of civilization, containing everything from reproductions of cave drawings to contemporary celebrity photographs. Corbis operates offices in Seattle, New York City, Los Angeles, San Diego, and Paris.

Origins

Corbis began its business life with an objective significantly different from what its posture during the late 1990s suggested. The company was founded in 1989 as Interactive Home Systems, a company personally funded by Microsoft founder and chairman, Bill Gates. At its formation, Interactive Home Systems presented itself to the corporate world as an art-licensing

company, an enterprise whose strategy, not surprisingly, hinged on electronic technology, the realm of Gates’s mastery. Gates envisioned a system that could deliver the great art works of human history into consumers’ homes, and he formed Interactive Home Systems as the company that eventually would beam the paintings of famous artists via technology that had yet to be developed. Interactive television was suggested as a way to deliver the content, but as the development of the ultimate conduit was under way, Gates’s privately held company busied itself with its first order of business. Before the technology was in place to provide home delivery of the world’s art treasures on display screens, the content itself had to be obtained. Accordingly, Interactive Home Systems, bankrolled by Gates’s growing fortunes, began acquiring the rights to the content that technology would supply later to the public.

The company embarked on a campaign of acquiring the electronic rights to artwork from a number of famous collections, securing nonexclusive digital rights to personal collections and those held by museums. Exhibiting the fear of monopolistic control evoked by Gates’s advances in the software industry, observers watched Interactive Home acquire collections from the National Gallery of London, the Library of Congress, the Sakamoto Archive, the Philadelphia Museum of Art, and the State Hermitage Museum in St. Petersburg, Russia. The company’s acquisitions covered the gamut of artistic work, ranging from the Barnes Foundation, which controlled paintings by Renoir, Cezanne, and Matisse, to the archive of the Massachusetts Institute of Technology’s School of Architecture and Planning. Having purchased the digital rights to thousands of images for digital conversion, Interactive Home awaited the technology that could deliver its newly acquired content to the public. The wait promised to be a long one: acceptable technology had not yet emerged.

Strategic Change in 1994 Leads to Bettmann Archive Acquisition in 1995

In 1994—the same year Gates acquired the Codex Leicester, Leonardo da Vinci’s notebook, for $30.8 million—five fruitless years of waiting for a widespread technological revolution had proved sufficient to provoke a change in strategy. A new management team was put in place, as the pursuit of developing technology became a secondary concern. Of primary importance was cataloging, indexing, and acquiring further image collections. The change in priorities reflected a shift from the company’s roots as an art-licensing concern toward a new corporate objective: assembling the most comprehensive digital photographic archive in the world. Along with the altered business focus came a new name for the Gates-sponsored company. Interactive Home Systems was abandoned as the company’s corporate banner, replaced by Continuum Productions, which, as the company struggled to find direction, was dropped in favor of Corbis Corporation, adopted in 1995.

The name Corbis, Latin for “woven basket,” signaled the company’s intention to develop into a formidable repository of digital content. By October 1995, there was little doubt that the company was pursuing such an objective, its intentions made clear with the purchase of the Bettmann Archive. Acquired from the Kraus Organization for a reported $25 million, the Bettmann Archive represented the life’s work of Otto Bettmann, the son of a German-Jewish surgeon who began collecting discarded medical illustrations from his father’s wastebasket at the age of 12. Bettmann’s penchant for gathering miscellanea was unleashed at the Berlin State Arts Museum, where he worked as a curator of rare books. Bettmann photographed everything he could get his hands on, snapping images of photographs, illustrations, lithographs, and old prints with his Leica camera. In 1935, he left Nazi Germany, fleeing to the United States with two steamer trunks containing the core of all of the material he had collected during the previous two decades. Bettmann moved to New York City, where he resumed collecting photographs and other images and turned his pastime into a business. For a fee, material from Bettmann’s evergrowing collection was available for one-time use, an opportunity that publishers, educators, scholars, advertising agencies, and movie and television studios took advantage of, paying Bettmann licensing fees ranging from $50 to $3,000. Bettmann sold his archive in 1981 to a small publishing firm who continued to add to the collection as Bettmann had done ceaselessly since 1915.

Prior to acquiring the Bettmann Archive, Corbis controlled roughly 500,000 images, a total that would increase exponentially when the Bettmann drawings, artworks, news photographs, and other illustrations were added to the company’s portfolio. In all the Bettmann Archive contained 16 million images, ranging from Mathew Brady’s Civil War pictures to photographs of Rosa Parks’s symbolic bus ride, making Corbis the largest supplier of stock photography in the world. Douglas Rowan, Corbis’s chief executive officer, was elated. For a company that had been somewhat rudderless, the acquisition of the Bettmann Archive provided clear direction, instilling Rowan with sufficient confidence to declare, “We want to capture the entire human experience throughout history,” as quoted in the December 11, 1995 issue of Fortune magazine. The company immediately began the arduous task of scanning the Bettmann material for digital distribution to a broad range of print and electronic media publishers, a process that Bettmann, in his early 90s at the time of the acquisition, applauded. In an interview with Time magazine, Bettmann revealed that he was delighted “to have seen my original acorn nourished and cultivated into a formidable digitized oak.”

In the wake of the Bettmann Archive acquisition, Corbis pressed forward with actualizing the lofty ambition articulated by Rowan. In 1996 the company acquired the exclusive rights to approximately 40,000 images photographed by renowned wilderness photographer Ansel Adams. The Ansel Adams acquisition was coupled with a licensing agreement signed by Corbis with the Mariners’ Museum in Newport News, Virginia, which controlled 650,000 photographic images. By 1997, however, the confidence and direction engendered by the Bettmann Archive acquisition had begun to fade. The company continued to grapple with problems stemming from its business focus and how to make money from whichever focus it chose. The significance of the problems reached a critical point when Bill Gates intervened and demanded that further fundamental changes needed to be made.

Key Dates:

1989:: Microsoft founder Bill Gates forms Interactive Home Systems.
1995:: The Bettmann Archive is acquired, dramatically increasing the company’s visual content collection.
1996:: Exclusive rights to 40,000 Ansel Adams photographs are obtained.
1997:: New management leads Corbis to greater presence on the Internet.
1998:: Digital Stock Corp. and Westlight are acquired, greatly increasing content available to professional customers.
1999:: France-based Sygma is acquired, adding 40 million images to Corbis’s content collection.

Reevaluation of Strategy in 1997

Corbis was a singular company, financially sponsored by the world’s wealthiest individual and charged with turning a vision of the future into reality. The company had failed to provide electronic home delivery of great art works to the public; eight years after its founding the only system capable of such a feat was installed in Bill Gates’s mansion. More pressing, and more relevant during the late 1990s, was the fact that Corbis lacked the ability to turn a profit. In 1997 revenues covered only one-third of the company’s costs, a situation made more depressing by the prediction of Corbis executives that profitability for the company was still five to seven years away. Aside from licensing the images from its collections, Corbis generated revenue from the CD-ROM titles it published, a market the company had entered as a way to utilize its growing visual content. Corbis had earned critical acclaim for its software, publishing award-winning titles such as A Passion for Art: Renoir, Cezanne, Matisse, and Dr. Barnes, compiled from the Barnes Foundation collection, and Leonardo da Vinci, which showcased the Codex Leicester. But critical success did not necessarily translate to financial success. Although sales of CD-ROM games and educational software were increasing in excess of 20 percent annually, the market was a difficult one in which to make money. Of the more than 5,000 titles produced annually, only four percent produced a profit. Corbis could not count itself among the profitable few. Gates voiced his displeasure in the summer of 1997. At roughly the same time, Rowan resigned, frustrated by Corbis’s lack of strategic direction. The situation called for yet another approach to achieving success with visual content, an approach that had to resolve the company’s problems with marketing its esteemed imagery.

Following the departure of Rowan, Corbis’s leadership devolved to a jointly held office of the president. Steven Davis, a lawyer specializing in intellectual property, and Anthony Rojas, an accountant picked to oversee operations, were named as co-presidents of the firm. Davis and Rojas immediately scuttled the company’s CD-ROM business and fixed their sights on the Internet, where Corbis would act as a digital curator, providing all types of visual content through digital technologies to professionals and consumers alike. As the pair set out, the company had scanned one million images into digital form and cataloged them in an extensive database. Structurally, Corbis comprised The Corbis Collection, containing the main body of the company’s content, and Corbis Images, the image-licensing division geared for professional customers. The late 1990s would be spent fleshing out the content of these two segments, adding other subdivisions of content, and pressing ahead with the daunting task of converting the continuously growing collection of material to digital form.

Corbis’s image-licensing division benefited from significant acquisitions completed in 1998 that underscored the company’s commitment to electronic commerce and ignited impressive revenue growth. In February, the company acquired Digital Stock Corp., a leading supplier of royalty-free images. As opposed to traditional licensing agreements that allowed a customer to use an image once in a particular medium, royalty-free transactions allowed the customers to use an image in any medium for an indefinite period. The acquisition of Digital Stock ushered Corbis into the royalty-free niche of the visual content industry, which was expected to be a high-growth market in the digital age. Organized as an operating division of Corbis’s image-licensing business, Digital Stock broadened Corbis’s customer base substantially, adding advertising, graphic design, corporate communication, multimedia, and Web site design customers. In May, Corbis followed up on the acquisition of Digital Stock by purchasing Westlight, founded by a National Geographic photographer whose collection of commercial images contained more than three million photographs. In July, another division was added to Corbis Images when the company acquired Outline Press Syndicate, Inc., the leading supplier of celebrity portrait photography. Renamed Corbis Outline, the company syndicated studio portraits and candid photographs of actors, musicians, athletes, politicians, business leaders, scientists, and other celebrities and provided the images for sale to a broad range of national magazines. In 1998 the company also added to the Corbis Collection, which by the end of the year comprised 25 million images, with more than 1.4 million available on-line. In April, Corbis signed a nonexclusive agreement to license and to distribute the work of photojournalist John G. Moebes, renowned for his photographs of the civil rights movement.

The acquisitions completed in 1998 were a large part of the reason Corbis executives could celebrate an occasion not often celebrated by company officials: the release of financial information. The most encouraging financial figures were recorded by the company’s image-licensing division, which recorded explosive growth between 1997 and 1998. Corbis Images’ sales increased 200 percent, led by a 278 percent increase in digital sales. Also contributing to the growth in sales was a number of technological improvements that professional customers could use to obtain digital images. Search filters had been added to a newly designed interface at the division’s Web site, http://www.corbisimages.com., allowing customers to use more than 170,000 catalogued terms to aid their search for a particular image. Further, the division began employing new server technology, which accelerated access to the 1.4 million images that had been converted to digital form. For the remainder of the collection, Corbis Images offered scan-on-demand service.

Strengthening the professional segment of Corbis’s business occupied much of the company’s attention in 1998, but the consumer side was not ignored. In December 1998, concurrent with the on-line release of certain images from the Ansel Adams collection, Corbis launched the Corbis Store, an online fine art and photography shopping center for the general public. At http://store.corbis.com, customers were provided access to more than 1,000 prints, posters, and Digital picture Packs, which included images for personal use. The launch of the Corbis Store was followed by a more ambitious offering to consumers when the company, touting itself as “the Place for pictures on the Internet,” offered consumers the opportunity to purchase and download images form the Corbis Collection. Debuting in April 1999, the Corbis picture Experience, http://search.corbis.com, allowed consumers to browse and license more than 350,000 images for their personal use. Included in the electronic offering were images covering a variety of content categories, such as historical, contemporary, fine art, and celebrity images, available for $3 per download.

As Corbis prepared for the future, it exited the 1990s on a positive note. The encouraging financial performance of 1998 was equaled during the first quarter of 1999, as sales increased more than 200 percent over the total registered during the first quarter of 1998. To fuel further confidence at company headquarters, traffic at the company’s image-licensing Web site increased 273 percent between March 1998 and March 1999, and membership during the period increased 94 percent. The robust growth rates of 1998 and 1999 demonstrated what had eluded the company throughout much of its history: that the strategy in place was working. To build on the momentum achieved during the last years of the 1990s, further acquisitions of visual content were expected in the decade ahead, as the company endeavored to supply the full spectrum of visual needs on the Internet. Evidence of the company’s insatiable appetite for content marked its exit from the 1990s, when Corbis completed the largest acquisition in its history. In June 1999, the company acquired Sygma, the largest news photography agency in the world. Organized as a division of Corbis Images, the France-based company, renamed Corbis Sygma, added an astounding 40 million additional images to the company’s collection, expanding Corbis’s portfolio beyond 65 million images. In the years ahead, Corbis’s content collection promised to grow further, as the company pressed forward with its goal of creating a one-stop source for all image needs.