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Getty, Gates draw swords over digital images

Two of America's richest families are locked in a battle that only the Internet could create: a race to build the largest digital image archives.

Two of America's richest families are locked in a battle that only the Internet could create: a race to build the largest digital image archives.

Mark Getty, heir to the Getty oil fortune, has pitted his Getty Images firm against Bill Gates's Corbis. Intensifying the struggle, Getty Images this week acquired Dallas-based Image Bank from Eastman Kodak--the company's largest acquisition so far--and relegated Microsoft's chairman to a role he's rarely played, one of an underdog. That may not last for long, however, as Corbis is on an expansion binge of its own, cutting distribution deals with Excite@Home and others.

For years, photo and archive houses were the mainstays of the relatively small market. Once the technology was created to send images over the Internet, the business began growing. Now, the market supplies to publishing, advertising, movie-making companies, as well as to the public.

As the field has narrowed to these two market Goliaths, an irresistable question has emerged from the rivalry: How much of this clash is about business opportunities and how much is driven by pure ego?

Digital legacy
The Gates and Getty interest in the estimated $2 billion digital image market could have as much to do with a desire for immortality as for money, said Vernon Keenan, an analyst with San Francisco-based Keenan Vision. After this century's first industrial revolution, tycoons like John D. Rockefeller and Andrew Carnegie built museums, universities, concert halls, and other landmarks of their wealth. Fitting for the digital age, ownership of image archives may be the modern equivalent for the Getty family and Gates.

"It's a phenomenon of the modern tycoon era," Keenan said. "An image bank that has a mass of size could be around for a long, long time."

Whether both businessmen can share the legacy is yet to be determined.

With the Image Bank acquisition, Getty Images has 60 million pictures and 30,000 hours of film footage and is earning substantially more revenue than any of its competition, according to Peter Appert, an analyst with Deutsche Banc Alex. Brown. Appert estimates the company's revenues at $360 million in 2000.

"I wouldn't suggest that the other players are irrelevant, but Getty Images is three times bigger than the next largest player," Appert said. "They have cemented their position as the No.1 player."

Keenan said Getty's previous acquisition of Art.com gives the company a stronger presence in the consumer image market, which could give it an advantage over Corbis this holiday season. "Getty has a consumer strategy that could gain it some awareness and momentum in Q4," Keenan said. "Corbis doesn't have that."

"It looks likes [the race is] over," said Jonathan Klein, cofounder and CEO of Getty Images.

Corbis, naturally, begs to differ.

"I don't think the race has even started," said Steve Davis, president of Corbis. "The horse race for us has not been about the amount of revenue we can acquire through buying companies. The horse is about how we can put the right content together, the right technology, and the right services to create a profitable business."

Corbis' strategy has focused on selling images to the public, while Getty has concentrated on the business-to-business market, which includes advertising, graphic arts, and other companies.

"In certain markets we compete but we really are after different markets," said Davis, who reports to Gates, Corbis's sole owner. "Our strategy is to define and provide digital content to a broad set of desktops to all sorts of computer markets."

Appert estimates Corbis to make about $60 million in sales. Corbis is focusing on servicing newspapers and magazines. "We're by far the largest supplier in the editorial world," Davis said.

He added that Corbis sells photographs to the public by selling pictures for screensavers, home publishing, electronic greeting cards, and posters.

And Corbis has made deals with Excite@Home, which provides Internet services over a cable infrastructure, and has been working with Intel to develop a broadband portal for digital imaging resources and tools. This portal, dubbed "Making Pictures," was created to be a one-stop shop for users to develop and digitize film, and create and distribute digital images.

As for any personal duel between the two billionaire families, both deny that any feud exists.

"Gates doesn't run the company; he leaves that up to us," Davis said. "Sure, he takes a good look at investment strategies and tells us to focus on the key issues, the key deals. He also says, 'Don't worry about what Getty is doing.'"