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Author Topic: iStock is miscalculating royalty amounts  (Read 4364 times)

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« on: December 11, 2012, 15:53 »
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I had posted about this topic in the thread about Nov 14 stats, but it really needs to be separate.

Bottom line is that iStock is using floating point math to calculate royalties and the numbers are off. The particular case I noticed I was getting paid 2 cents too much, but as contributor relations acknowledged, the numbers can be rounded up or down, so we could just as easily be shortchanged in transactions and not notice it.

I'll try and dig up the old thread on this from the istock forums a year or two ago. It was underpaying subscription royalties because they rounded something down. People pointed out then that they were doing it wrong. The solution as I recall was to round up for the cases people complained about and continue as before.

What CR refers to below that "...we do not use the two decimal calculations for royalties..." is their way of saying that they're using floats not integers to calculate the money. I've seen lots of stuff written about the fact that you need to use scaled integers rather than floating point to handle money calculations, but this isn't my area of expertise.

What I do know is that there a multitude of banks and businesses that can handle this accurately and iStock cannot. Their royalty payment to me was off by 2 cents - in this case two extra cents, but it could just as easily have gone the other way and been under. CR has confirmed that they think this is correct and have checked with the developers to verify that. And this case isn't a round up or down if you use integers - 17% of $34.00 comes out to $5.78 exactly.

Perhaps in the face of all the other problems, millions of potentially incorrect royalty payments seem like small potatoes, but I think it's a very big deal and something they  need to fix.


« Reply #1 on: December 11, 2012, 15:56 »
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Here's the history:

Dec 4 2012

On the subject of stupid questions (  ) I'll ask another one. I wonder if iStock is calculating our royalties correctly - or alternatively, how they came up with $5.80 as my royalty on an XXXL sale this morning?

I get 17% royalty

That size (Photo +) is 20 credits or $34. If it was a cash sale I would have received $5.78

If it's credits, the most expensive credit pack (12) is $1.67 per credit. Working out what the buyer paid per credit given my $5.80, it's $34.12 (.1176 without rounding) or $1.70 per credit. I thought they were ripping us off on foreign currency transactions and paying on a dollar basis and pocketing any extra, so I don't think it can be a buyer outside the US.

I haven't asked contributor relations as I generally get useless answers that it's correct and because of privacy they can't explain anything. It might seem insane to complain about a number being too high, but when things aren't accurate, that's the worrying part, not whether they're over or under.

Dec 11 2012

So I received a reply from contributor relations this morning about my query on the $5.80 royalty. The person's math skills are apparently hopeless as the reply - which said my royalty was correct - included the following:

"The file was purchase at the $19.00 price Point (USD) not at the $34.00 price point and you have received the 17% of that amount."

I received $5.80 and 17% of $19.00 is $3.23, which I pointed out in my reply. I had mentioned the $34 price point as it was the maximum possible you could pay for that file and yet even that wasn't high enough to make a $5.80 royalty - a point apparently lost on the rep.

I'll post if I get any further response - it's like wading through molasses dealing with them...

Dec 11 2012


After several more exchanges with my friendly support representative (and it's nice that the responses are swift), I'm in some insane Alice-in-Wonderland situation that leaves me wondering if we have ever been paid correctly for anything at iStock.

So, after establishing that the rep was looking at the wrong sale and that the one I was asking about was indeed a cash sale for $34, the rep insists that $5.80 is right for a 17% royalty. I write back saying that 17% of $34 is $5.78 and that wrong is wrong, even if it happens to be in my favor this time. I then get a reply including the following:

"Due to the complexity of our royalty calculation we do not use the two decimal calculations for royalties therefore you will see a mathematical round up or down of your calculation as your home calculator does  run on a two decimal system."

I think what she's referring to is that they use floats not integers in their software - there was an earlier forum rant about how wrong they were when they were found to be underpaying on subscription sales.

Here's what I sent back to them:

"Thank you for your answer, but that doesn't correspond to the royalties that I see all the time - just look at all the other royalties for this file.

There are royalties for 52 cents, $1.37, $5.52 - I could go on, but I think you get the point. There are many, many royalties that are not rounded up to the nearest 10 cent amount.

And there is no rounding required to calculate 17% of $34.00 - it comes to $5.78 exactly - no fractional cents.

There is something wrong here and possibly the software engineers need to look at it. They are calculating the royalty on $34.00 incorrectly, albeit in my favor in this case."

I received back a reply:

"They are not being rounded by the ten cents( you are still basing your calculations on a two decimal system which is rounding to the  ten cents.)

I have confirmed with our Dev team that the royalty calculations are being done correctly."

« Reply #2 on: December 11, 2012, 16:30 »
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Good we have a number witch.

Actually I think, if they do things like that, and do not react to information about it or if it is done deliberately, it is breach of contract.
And breach of contract, means they do not honor their part of the contract, therefore you dont have to honor your part.
It summs up:

Refunding.
Manipulating exchange rates.
Fluid maths when calculating commisions.
Fluid maths when counting downloads.
Rounding down.
In my country (Denmark) that would all be illegal.

That is an open window for the exclusives.
I think im going to post it as a question to Rebecca.

« Reply #3 on: December 11, 2012, 16:42 »
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I have the feeling that I have better post it here also:
I wrote in the istock forum:
Rebecca...

I would like to see some open and clear communication about the following very concrete issues:

Refunding policy. What is istocks refunding policy and does istock take the necessary measures to prevent our content from being illegally distributed?
Is the calculation of exchange rates fair and does contributors get a fair share of any gains?
Is calculations of commision shares correct in all cases?
Are the number of downlads measured correctly.
What rules for rounding down or up is istock following?

Poncke

« Reply #4 on: December 11, 2012, 16:45 »
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Couldnt it be that the 34.00 is not the correct price to start with as she keeps going on about the decimals not being correct

« Reply #5 on: December 11, 2012, 16:45 »
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The threads on errors in subscription calculations were  here here and here

Here are the links to the discussions about floating point (it's a very long thread so these are to the posts that talk about calculations - one two three four five

« Reply #6 on: December 11, 2012, 16:47 »
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Couldnt it be that the 34.00 is not the correct price to start with as she keeps going on about the decimals not being correct

From her note this morning:

"The file download for $34.00  for Dec 4th is correct in the royalty payment."

« Reply #7 on: December 11, 2012, 17:10 »
+1
They are definately borderline with many financial things, its not legal, not when done on purpose.

Fx rounding up or down. Which is pretty clear. I have found the rules.
and Im ready to try and nail them.
As it is now, they would not be allowed to do business in Denmark. Maybe not in Europe.

Danish National bank has rules for rounding up and down that has to be followed if you want to do business in the country. Many countries might have such rules.

http://www.nationalbanken.dk/DNDK/money.nsf/side/Nye_afrundingsregler!OpenDocument

One thing is clearly stated: Any payment on the internet has to be at the exact amount, anything else is considered fraud.

ShadySue

« Reply #8 on: December 11, 2012, 17:42 »
+1
As a tangent, here's what iStockLawyer has to say about the currency hedging:
http://www.istockphoto.com/forum_messages.php?threadid=349689&page=1#post6797809

« Reply #9 on: December 11, 2012, 20:40 »
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multiply a couple of pennies times how many contributors...i think they can make themselves a nice little chunk of change every week.


ShadySue

« Reply #10 on: December 11, 2012, 20:58 »
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multiply a couple of pennies times how many contributors...i think they can make themselves a nice little chunk of change every week.
Quite, yet I can't get a reply to my query about losing the 3.33 in currency charges from PayPal when repaying their mistaken double payment.
No surprise there, I guess.

« Reply #11 on: December 11, 2012, 20:58 »
+1
As a tangent, here's what iStockLawyer has to say about the currency hedging:
http://www.istockphoto.com/forum_messages.php?threadid=349689&page=1#post6797809


I think the lawyer is trying to say that because they've been doing things that way all along, changing the actual words in the ASA and rate schedule wasn't really a change and thus didn't need 30 days notice.

Fancy footwork but way too slippery.

I also don't buy all the nonsense about currency hedging. They already pay us at varying rates per credit. The system needs to track the actual USD amount per credit at the point the customer purchases and then that is used when paying us. Otherwise, in addition to keeping extra on the conversion, they're playing games over the course of the period the credits are held, potentially paying us less (whatever that week's conversion rate is).

They also need to permit purchases in USD from wherever and let the customer handle paying the currency conversion fees if they want to do it that way. Otherwise it seems they're trying to turn this into another source of fees for themselves.

RacePhoto

« Reply #12 on: December 12, 2012, 01:17 »
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Fancy footwork but way too slippery.


Good thread, interesting reading. Thanks

Carl

  • Carl Stewart, CS Productions
« Reply #13 on: December 12, 2012, 07:43 »
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They must be using the same fuzzy math that homo depot is using...


« Reply #14 on: December 12, 2012, 08:49 »
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They must be using the same fuzzy math that homo depot is using...

I had no idea such shops existed on your side of the pond.

« Reply #15 on: December 13, 2012, 01:58 »
+2
I have posted this in teh lawyer thread:
istock and istocklawyer.


Do you not do not realize that refunding undermines the whole bussiness agreement we have with you.


The deal is relatively simple: We allow you to distribute licences based on our copyright. You provide distribution channels and a financial system. For this you take 84% commission. All our files are inspected by istock and all material on the site is approved by istock. This is what you are paid for, to maintain the marketplace. You are of course free to negotiate all kinds of rebates and refund policies, but it must be kept within your domain.


When you refund a file to us, for any reason, you deny your responsibility for the marketplace and moves responsibility back to the contributor, just like before you approved the files.


You cannot only take responsibility for the marketplace when its profitable and leave the losses on the contributors who have no influence on the decisions inside the marketplace. If you do so, then you have fluid borders in your business, and the business is on swampy ground legally you may loos the rights to your commision, or you may be breaking the contract.


The deal is clear, you get your commision so you can maintain the marketplace. No less no more, the contributors are not part of the markeplace, neither in agreement nor in fact.


You have a dashboard full of financial buttons, and it seems that you have pressed many at PLUS for istock. But because you have that dashbord, and can press buttons it does not mean it is legal. Istock lawyer, being a lawyer must have considered  what a court would say to the questions about refunding, currency, and round ups. And yes, we are small solitary fish, but we are very MAD. And fish can school.


Considering fraud.


First the insult that the contributors should not be able to buy their own files with a stolen credit card. Same with istock employees, they should not be able to, with a stolen password to go back and claw in refunds.


Still, its all your marketplace, and you can hire detectives or the whole swiss guards to keep it clean. It IS your responsibility, not the contributors.


And then I do not understand how you dare refund us for fraud downloads. Do you not realize that our loss compares to a full sell of the rights. A loss that istoch is responsible for.


So Ill end this post by issuing a protest by today 13. dec. 2012, that I protest against any refunds for the above reasons, and Im especially conserned about fradulent downloads.

« Reply #16 on: January 04, 2013, 14:21 »
+2
They're still messing up calculations - similar problem to the one I first described, but now they're paying me 18% a $34.00 XXXL sale should net me $6.12 and I was credited with $6.20. At the most expensive credits ($1.67) a 20 credit file would cost $33.40 and thus my royalty would rightly be $6.01

I sent site mail to Ms. Rockafellar when she was "communicating" last month but that's gone unanswered. FWIW it said:

"Ms. Rockafellar,

iStock calculates contributor royalties using floating point arithmetic. This results in predictable and well understood errors. Many view it as incorrect to make currency calculations this way because of the lack of precision.

This first came up at iStock 2 years ago because a contributor noticed an error in subscription royalties. An iStock employee (Joyze) acknowledged in the forums that the error came about because of the use of floating point calculations.

Instead of fixing the general problem, the correction was to round up the particular subscription royalty.

From an exchange this week with contributor relations over an incorrect royalty of mine on a cash sale - it was 2 cents too much, but the errors can be either positive or negative - it was again acknowledged that the discrepancy came from the use of floating point calculations. Contributor relations insisted that the developers claim the royalty is correct.

If you get out a calculator to figure 17% of $34.00 you'll see it says $5.78 - not the $5.80 I was credited with.

The potential liability to Getty for mis-handling all contributor royalties site wide is huge. There's no point in arguing with CR. I strongly urge you to talk to the folks who handle this area and get this fixed - if my bank handled money the way iStock does they'd be shut down.

I can get you links to the 2010 discussion and my CR exchange if you need them.

regards

Jo Ann Snover"

lisafx

« Reply #17 on: January 05, 2013, 16:33 »
0
I have posted this in teh lawyer thread:
istock and istocklawyer....


I agree with everything you posted, but I don't think it will have any affect. 


 

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