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Author Topic: Istock Second "Explanation" to Contributors  (Read 15978 times)

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anc

« on: September 09, 2010, 10:00 »
0
Istock posted a second "Explanation" to its contributors - the link is here:

http://www.istockphoto.com/forum_messages.php?threadid=252322

This is the bit that irritates me:

"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."

If they want Istock's profit to increase each year why don't they advertise to potential customers more. Concentrate on raising everyone's profit - istock's and contributors. Concentrate on getting more people buying from Istock.

Next year are they going to lower contributor royalties again because they need to increase their profitability next year too?

Basically what they are saying is "We get one pizza a year -- and whereas before you used to be given two slices of pizza from us, now we will just give you one." -- instead of being like - "Okay how can we get more pizza for both of us"
« Last Edit: September 09, 2010, 10:02 by anc »


« Reply #1 on: September 09, 2010, 10:09 »
0
Ok, they could not increase contributors' margins anymore, keep the existing members' share and change/cancel increases only for people who would achieve higher ranks or choose exclusivity from now.  But cut the already mere 20% is just ridiculous.

« Reply #2 on: September 09, 2010, 11:43 »
0
So, what they're saying is that they are the most mismanaged business in the industry because they can't maintain the same royalty rates in the rest of the industry despite having higher prices.  ???

I also like how they don't even really mention non-exclusives.

m@m

« Reply #3 on: September 09, 2010, 11:49 »
0
I also like how they don't even really mention non-exclusives.

It's all mind over matter, they don't mind, we don't matter.  ;)

« Reply #4 on: September 09, 2010, 11:50 »
0
I also like how they don't even really mention non-exclusives.
Thomson did, in his second announcement. He admitted non-exclusives would suffer the hardest blow.

donding

  • Think before you speak
« Reply #5 on: September 09, 2010, 11:53 »
0
So, what they're saying is that they are the most mismanaged business in the industry because they can't maintain the same royalty rates in the rest of the industry despite having higher prices.  ???

I also like how they don't even really mention non-exclusives.

That's because we aren't all that important. It is the exclusives where they make a lot of the top dollars. I was just thinking about what they said in that statement which may pound that nail deeper into their coffin. Was it a smart thing to say their profits were going down from a business point of view?

« Reply #6 on: September 09, 2010, 12:05 »
0
Istock posted a second "Explanation" to its contributors - the link is here:

http://www.istockphoto.com/forum_messages.php?threadid=252322

This is the bit that irritates me:

"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?

« Reply #7 on: September 09, 2010, 12:09 »
0
Istock posted a second "Explanation" to its contributors - the link is here:

http://www.istockphoto.com/forum_messages.php?threadid=252322

This is the bit that irritates me:

"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?


LOL it is just crazy.. they earn 80% from the non and around 60% from the exclusives no? they must have a lot of expenses or something is wrong there..

Xalanx

« Reply #8 on: September 09, 2010, 12:11 »
0
Istock posted a second "Explanation" to its contributors - the link is here:

http://www.istockphoto.com/forum_messages.php?threadid=252322

This is the bit that irritates me:

"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?


Their "overall percentage increase" is referring probably to the fact that contributors changed canisters and therefore commission percentage. But its crap anyway, in my opinion. Their business is not unsustainable, at least NOT BECAUSE of contributors increasing canisters.

PaulieWalnuts

  • On the Wrong Side of the Business
« Reply #9 on: September 09, 2010, 12:17 »
0
Istock posted a second "Explanation" to its contributors - the link is here:http://www.istockphoto.com/forum_messages.php?threadid=252322This is the bit that irritates me:"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?


You are thinking only about non-exclusives. Given enough time with the old model, say 20 years as an example, even exclusives who uploaded 100 images their first month and then quit could go from 20% to a 40% diamond just from total downloads over time. I get what they're saying. Over time their average profit decreases as more people move up canisters. Which every exclusive eventually will. I understand what they're getting at but don't agree with the goals they've set. I think their estimates are off. We'll see if they change them.

« Reply #10 on: September 09, 2010, 12:26 »
0
Istock posted a second "Explanation" to its contributors - the link is here:http://www.istockphoto.com/forum_messages.php?threadid=252322This is the bit that irritates me:"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?


You are thinking only about non-exclusives. Given enough time with the old model, say 20 years as an example, even exclusives who uploaded 100 images their first month and then quit could go from 20% to a 40% diamond just from total downloads over time. I get what they're saying. Over time their average profit decreases as more people move up canisters. Which every exclusive eventually will. I understand what they're getting at but don't agree with the goals they've set. I think their estimates are off. We'll see if they change them.


What do you think would be reasonable levels?

PaulieWalnuts

  • On the Wrong Side of the Business
« Reply #11 on: September 09, 2010, 12:37 »
0
Istock posted a second "Explanation" to its contributors - the link is here:http://www.istockphoto.com/forum_messages.php?threadid=252322This is the bit that irritates me:"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?


You are thinking only about non-exclusives. Given enough time with the old model, say 20 years as an example, even exclusives who uploaded 100 images their first month and then quit could go from 20% to a 40% diamond just from total downloads over time. I get what they're saying. Over time their average profit decreases as more people move up canisters. Which every exclusive eventually will. I understand what they're getting at but don't agree with the goals they've set. I think their estimates are off. We'll see if they change them.


What do you think would be reasonable levels?


Don't know yet. I haven't run the numbers. But according to istock the last four months of the year equal the first 8 months in terms of credit volume sales. So supposedly this end of year boost should put people way higher in redeemed credits than people believe. If that's true it would double my current redeemed credits level by the end of the year which I find hard to believe. We'll see.

« Reply #12 on: September 09, 2010, 12:37 »
0
Istock posted a second "Explanation" to its contributors - the link is here:http://www.istockphoto.com/forum_messages.php?threadid=252322This is the bit that irritates me:"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable: businesses should get more profitable as they grow. This is a long-term problem that needs to be addressed."


Wow. This is a biggest piece of BS I ever heard. Obviously, whoever wrote this has trouble with basic math, or counting on us to have failed math in 4th grade. How is it even possible that "overall percentage" increases when they always paid contributors 20% of the sale??? Did they increase our percentage without telling us somehow in the last years? Well of course not. The percentage remained the same. The amount of money they paid to contributors increased, but so did their profits, correspondingly! in the 20:80 ratio. If they used to pay contributors 2 million, they were making 8. If now they their payouts are 20 million, they are making 80! How is that becoming less profitable with increased success? And why making millions and millions of dollars a year is not enough for them?


You are thinking only about non-exclusives. Given enough time with the old model, say 20 years as an example, even exclusives who uploaded 100 images their first month and then quit could go from 20% to a 40% diamond just from total downloads over time. I get what they're saying. Over time their average profit decreases as more people move up canisters. Which every exclusive eventually will. I understand what they're getting at but don't agree with the goals they've set. I think their estimates are off. We'll see if they change them.


Yes I was thinking about non-exclusives, that's true. I've been a diamond non-exclusive on Istock for quite a while and wasn't following their incentives for exclusives... WHICH THEY INTRODUCED THEMSELVES! Just after being bought by Getty, surprise-surprise... Their obsession with exclusivity caused lower upload limits and acceptance rate for non-exclusives, even if they were good sellers, which was ridiculous and against all common sense. And NOW they are making non-exclusives pay for their short-sighted decisions! Well they are making all contributors pay. Wonders of corporate culture...

« Reply #13 on: September 09, 2010, 12:44 »
0
"Since roughly 2005 we've been aware of a basic problem with how our business works. As the company grows, the overall percentage we pay out to contributing artists increases. In the most basic terms that means that iStock becomes less profitable with increased success. As a business model, its simply unsustainable

I haven't seen my 20% increase anywhere in the last five years I have been a member. This is a very invalid argument for us independents.

michealo

« Reply #14 on: September 09, 2010, 12:54 »
0
.
« Last Edit: September 09, 2010, 12:58 by michealo »

vonkara

« Reply #15 on: September 09, 2010, 13:00 »
0
They pay the lowest in all industry. The problem is not the contributor share, it's the management it seem
« Last Edit: September 09, 2010, 13:51 by Vonkara »

PaulieWalnuts

  • On the Wrong Side of the Business
« Reply #16 on: September 09, 2010, 13:01 »
0
.

What happened? Did you figure out your variable costs post didn't add up?

« Reply #17 on: September 09, 2010, 13:48 »
0
Why couldn't Istockphoto just leave their 20% as a base and added more to contributors with more yearly sales? I am sure that would have been fine with most people. And it wouldn't make them "less profitable". Simple as that. If you don't take greed into account.

« Reply #18 on: September 09, 2010, 14:11 »
0
What if they did a per image approach instead. I really don't know what kind of effect this would have on anyone, but it is interesting to think about. I think non exclusives should still get a flat 20%, anything below that is just pathetic. But here are some numbers I pulled out of my ass for exclusives.

1-20 downloads = 25% commission
21-200 downloads = 30% commission
201-1000 downloads = 35% commission
1001-5000 downloads = 40% commission
5001+ downloads = 45% commission

« Reply #19 on: September 09, 2010, 14:23 »
0
What if they did a per image approach instead.
That's the DT approach, and it works well. A buyer doesn't buy a contributor or a canister, but an image.

vonkara

« Reply #20 on: September 09, 2010, 14:27 »
0
What if they did a per image approach instead.
That's the DT approach, and it works well. A buyer doesn't buy a contributor or a canister, but an image.

I would love to see something like the DT image levels on Istock

What if they did a per image approach instead. I really don't know what kind of effect this would have on anyone, but it is interesting to think about. I think non exclusives should still get a flat 20%, anything below that is just pathetic. But here are some numbers I pulled out of my ass for exclusives.

1-20 downloads = 25% commission
21-200 downloads = 30% commission
201-1000 downloads = 35% commission
1001-5000 downloads = 40% commission
5001+ downloads = 45% commission

That would be something more simple than what it actually is. I can't believe that for now on, I can't focus on doing fonts or anything that could be bought in Xsmall size. It's ridiculous how it harm some images popularity

« Reply #21 on: September 09, 2010, 14:32 »
0
Why couldn't Istockphoto just leave their 20% as a base and added more to contributors with more yearly sales? I am sure that would have been fine with most people. And it wouldn't make them "less profitable". Simple as that. If you don't take greed into account.

I have to wonder the same thing. 20% isn't that much. This explanation doesn't really hold water for non-exclusives. They make more off of exclusives sales because of the price difference. Even at 45%. Why take even more from the contributors that can't increase their earnings? Also, they say 76% of exclusives won't lose. What percent of their contributors are exclusive?

« Reply #22 on: September 09, 2010, 14:37 »
0
That's the DT approach, and it works well. A buyer doesn't buy a contributor or a canister, but an image.
I would love to see something like the DT image levels on Istock
It's a sustainable solution since on level 1 (at entry) images, they can recuperate the review costs and the database overhead. As the image goes up in levels, the marginal cost will become lower for the site. Thomson was right, the IS model was unsustainable in the long run but he addressed it the wrong way, both for IS and for its contributors.

« Reply #23 on: September 09, 2010, 15:11 »
0
The point is simple.  They are working on trying to make iStock exclusive only and pay 20%.

They will continue to drop the % for non-exclusives until they all leave (or work for free).  In the process they will drive exclusives down also to 20% like the rest of Getty and throw a few unreachable goals to keep the mice turning the wheel.

Once that is done, the door to iStock will be exclusive only and 20% (or less starting out).

That is my prediction.  Only time will tell.

As others have said, its not about "losing" money or being about to "sustain" the business; its about their long term (or short) goals and how they can get there.

« Reply #24 on: September 09, 2010, 15:13 »
0
I posted a topic on my idea, continue discussing it there:
http://www.microstockgroup.com/istockphoto-com/royalty-structure-idea/

Don't want to hijack this thread.


 

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