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Online Photo Services Put Pressure on Corbis

Over the past few years, Corbis has moved beyond newspaper and magazine clients to pursue advertising and graphic design agencies, as well as corporate marketing departments, which are turning increasingly to high-quality stock photography rather than doing their own expensive photo shoots.

Those customers are also buying footage from Corbis's growing library of 30,000 short video clips - mostly generic scenes of, say, people shopping or running down the beach.

What Corbis did not foresee was the rise of so-called microstock agencies like Fotolia and iStockPhoto. These sites take advantage of the phenomenon known as crowd-sourcing, or turning to the online masses for free or low-cost submissions. Thousands of amateur and semiprofessional photographers armed with high-quality digital cameras and a copy of Photoshop contribute photographs to microstock sites, which often charge $1 to $5 per image.

Although the microstock business still represents a small fraction of the $2 billion market for stock photos, analysts say it is possible that low micropayment prices could take business away from the higher-priced images Corbis relies on for the bulk of its revenues.

''Think about how visual the world is,'' said Barbara Coffey, a senior research analyst at Kaufman Bros. in New York who follows the stock photography market. ''We have pictures on our cellphones. If I can get a reasonably clear picture and the rights are cleared and I pay $2 for it, then why would I pay Corbis $200?''

The rise of the microstock companies has been of particular concern to Corbis. For all its new lines of business, the company still gets some 88 percent of its revenues from image licenses, yet commands only about 11 percent of that market. Getty Images dominates the market with a 40 percent share.

Getty, which has grown quickly since its start in 1995 with the backing of its wealthy co-founder, Mark Getty, has a foothold in microstock thanks to iStockPhoto, which it bought last year for $50 million.

Shenk said Corbis would announce its plans for the microstock business sometime this quarter. As for the question of how a high-end company enters that business without cannibalizing its more expensive products, Shenk said the idea was to find a new kind of customer, people who would never envision buying pictures from a Corbis or Getty.

In that vein, Shenk said that Corbis would make its service as easy to use as Apple's iTunes store, and hinted that Corbis would also be following the crowd-sourcing model.

''More interesting and innovative things are happening on the pages of Flickr these days than on Corbis and Getty,'' said Shenk, referring to the popular photo-sharing site owned by Yahoo. ''If we can use this type of opportunity to find the next great group of Corbis photographers, that also makes it a great opportunity for us.''

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