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Author Topic: Istock Second "Explanation" to Contributors  (Read 16195 times)

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RT


« Reply #50 on: September 13, 2010, 05:33 »
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Well I think they have faced financial trouble and operating at loss, the same as Corbis and others. Actually it would be better Getty copying the formula of istock, than viceversa (what they tend to do now).

Don't believe all the hype you read, they are certainly not suffering any financial trouble or operating loss regards their trading figures, last year on sales of over $850m they made a gross profit margin of 72.7% and an EBITDA of 32.6%, H&F certainly wouldn't have paid $2.4b to buy a company that was in financial trouble, the trouble you read about, the same that iStock are now reporting, is a result of the greedy 'merchant bankers' wanting to line their pockets and spending more than they can afford to, it has nothing to do with the companies actual operating profit.


« Reply #51 on: September 13, 2010, 06:58 »
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In the most basic terms that means that iStock becomes less profitable with increased success.

I've never heard that any company can become less profitable with increased success...

The people who wrote "Getty wants more money" are right, but here's their logic, which I understand but like you, can't agree with on the whole. It's flawed math as well.

The more that we make sales, if someone is an exclusive, the higher percentage the artists get, so more sales means lower percentages for Getty. However, as you pointed out, increased sales also mean more profits, even if they are at a lower rate. So their unsustainable rhetoric is pure BS. They make up the difference on volume! The problem is that people are making money and selling images (hey interesting concept, isn't that what we're supposed to do and the original claim?) but because they are reaching the higher canisters over time, Getty's cut is going down. Remember they are getting more sales volume, more income, just that they are forced to share a little higher percentage.

Independents don't count for anything, There are few exceptions, but IS and Getty couldn't care less if Ind. stay or leave. At 15% it's obvious that Getty isn't trying to enhance artists interests with potential profits. The message they are sending is, you can leave or stay, we don't care enough to pay you more than 15%!

Think about it for a minute. If independents were of value to IS, they would be encouraging us with income potential, not driving us away with lower commissions.

As much as I disagree with their proposed changes, the little bit of truth in their message is that IS's cut (of exclusive authors' work) is going down over time no matter how much volume they produce.
There could even be the case of the volume of an author (or a group of authors) decreasing but their share still be going up.
And this is because cannister levels and therefore commission percentage is based on total download numbers and thus on history - and not on current performance.

And exactly that they are changing with the proposed model - you will be promoted only if your current volume goes up, irrespective of your history.

I could accept such a concept as a good means to promote active contributors who continue to provide quality work. But where they failed completely (besides communication) is setting the goalposts.

And the cut for non-exclusives is in no way explainable by the same logic, as there has never been any chance to increase your percentage.
If they implemented a similar scheme for non-exclusives starting at 20% and giving us the chance to move up, there would have been a lot of cheering from the independents...

« Reply #52 on: September 13, 2010, 07:39 »
0
In the most basic terms that means that iStock becomes less profitable with increased success.

I've never heard that any company can become less profitable with increased success...

maybe you haven't read business section in the last 40 years...success doesn't always lead to profits, although I'm not sure that this is the case here

« Reply #53 on: September 13, 2010, 07:46 »
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Well I think they have faced financial trouble and operating at loss, the same as Corbis and others. Actually it would be better Getty copying the formula of istock, than viceversa (what they tend to do now).

Don't believe all the hype you read, they are certainly not suffering any financial trouble or operating loss regards their trading figures, last year on sales of over $850m they made a gross profit margin of 72.7% and an EBITDA of 32.6%, H&F certainly wouldn't have paid $2.4b to buy a company that was in financial trouble, the trouble you read about, the same that iStock are now reporting, is a result of the greedy 'merchant bankers' wanting to line their pockets and spending more than they can afford to, it has nothing to do with the companies actual operating profit.


Quite the opposite.  They were bought because they were in financial trouble and the takeover company figured they could add value to the company by installing a new management, altering it and fixing it.  And I'm pretty sure you are wrong: getty's stock price was falling through the floor making it a good target

« Reply #54 on: September 13, 2010, 07:47 »
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As I see on iStock forum, "revolution" is over. Now prepare to change you avatar in Japan flag...

« Reply #55 on: September 13, 2010, 08:09 »
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Not sure about that still people making the 'no confidence' vote and clients talking of going elsewhere  

plus I doubt we have heard the full story as yet so best button down for further eruptions
« Last Edit: September 13, 2010, 08:10 by iclick »

RT


« Reply #56 on: September 13, 2010, 10:34 »
0
Well I think they have faced financial trouble and operating at loss, the same as Corbis and others. Actually it would be better Getty copying the formula of istock, than viceversa (what they tend to do now).

Don't believe all the hype you read, they are certainly not suffering any financial trouble or operating loss regards their trading figures, last year on sales of over $850m they made a gross profit margin of 72.7% and an EBITDA of 32.6%, H&F certainly wouldn't have paid $2.4b to buy a company that was in financial trouble, the trouble you read about, the same that iStock are now reporting, is a result of the greedy 'merchant bankers' wanting to line their pockets and spending more than they can afford to, it has nothing to do with the companies actual operating profit.


Quite the opposite.  They were bought because they were in financial trouble and the takeover company figured they could add value to the company by installing a new management, altering it and fixing it.  And I'm pretty sure you are wrong: getty's stock price was falling through the floor making it a good target

I'd be interested to see where you got that information from? I can't find anything to suggest they were bought because they were in financial trouble and was just going by their reported financial figures which show exactly what I've indicated above, it also showed their share price had been maintaining a steady level until Dec 07 when it dropped, which by strange coincidence is just before the company was sold to H&F.

iStockphoto were bought by Getty but at the time they weren't in financial trouble, they were sold as an alternative to raising venture captial in order to expand.

Corbis like Getty is now (under H&F management) are a privately owned company and don't report their figures, again I see a lot of people speculating but haven't seen any hard evidence.
« Last Edit: September 13, 2010, 10:41 by RT »

« Reply #57 on: September 13, 2010, 11:45 »
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I'd be interested to see where you got that information from? I can't find anything to suggest they were bought because they were in financial trouble and was just going by their reported financial figures which show exactly what I've indicated above, it also showed their share price had been maintaining a steady level until Dec 07 when it dropped, which by strange coincidence is just before the company was sold to H&F.

You have to be kidding Richard. Getty's share price had dropped 73.5% in the two years before they sold out. The shareholders were grateful to grab H&F's cash to stem their own losses. There were no counterbids to H&F's offer.

http://www.forbes.com/2008/02/25/getty-hellman-friedman-update-equity-cx_md_0226-markets33.html

Istock wasn't sold to 'raise capital to expand'. It was sold to put $50M in Bruce's back-bin.

« Reply #58 on: September 13, 2010, 12:23 »
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Slightly OT (my apologies), but I am wondering for what period of time Mr. Bruce's no compete clause was for?

Maybe it is high time that 'Bitter' got back into the game and give Getty a black eye.

« Reply #59 on: September 13, 2010, 12:29 »
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Slightly OT (my apologies), but I am wondering for what period of time Mr. Bruce's no compete clause was for?

Maybe it is high time that 'Bitter' got back into the game and give Getty a black eye.

So he can sell us down the river again in a few years time?

RacePhoto

« Reply #60 on: September 13, 2010, 12:29 »
0

There could even be the case of the volume of an author (or a group of authors) decreasing but their share still be going up.
And this is because cannister levels and therefore commission percentage is based on total download numbers and thus on history - and not on current performance.

And exactly that they are changing with the proposed model - you will be promoted only if your current volume goes up, irrespective of your history.

I could accept such a concept as a good means to promote active contributors who continue to provide quality work. But where they failed completely (besides communication) is setting the goalposts.

And the cut for non-exclusives is in no way explainable by the same logic, as there has never been any chance to increase your percentage.
If they implemented a similar scheme for non-exclusives starting at 20% and giving us the chance to move up, there would have been a lot of cheering from the independents...

True and true, except when they started, they promised that with hard work, people could rely on a steady flow of income and increased commissions, based on long term volume sales. Not that people would be credited on current year sales only, which is quite a change. Part of the low pay program was a chance to move up and make more in the future. Now they are reversing years of work and taking away what people have worked hard to earn!

As for the independents. that's where I'm from and it makes no sense, no reason why they would cut an already low 20%, down to 15% because of some mythical "unsustainable" problem. What's the problem with making 80% off everything that non-exclusives send in? :( The answer is, someone just decided to give all the independents a 25% cut in the already minimal pay.

Can we reopen the "I'm going to be an exclusive next year" thread where the numbers were going up from 22% to 25% exclusive. Are we looking at exclusives dropping to under 20% of the contributors. Hey, nice move IS. First cut the exclusives, screw their hard work for years, so they change to independent and at the same time, cut the independents so they make less. Double dip in chopping earnings, all at the same time.

There's the plan. Alienate everyone, but increase the profits.

« Reply #61 on: September 13, 2010, 12:40 »
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Slightly OT (my apologies), but I am wondering for what period of time Mr. Bruce's no compete clause was for?

Maybe it is high time that 'Bitter' got back into the game and give Getty a black eye.

So he can sell us down the river again in a few years time?

My guess is that he was lied to just as we were.
I don't think he intended this to happen to his 'baby'.
I suspect that the reason he bailed from IS, is that he foresaw these changes coming.

RT


« Reply #62 on: September 13, 2010, 13:07 »
0
I'd be interested to see where you got that information from? I can't find anything to suggest they were bought because they were in financial trouble and was just going by their reported financial figures which show exactly what I've indicated above, it also showed their share price had been maintaining a steady level until Dec 07 when it dropped, which by strange coincidence is just before the company was sold to H&F.

You have to be kidding Richard. Getty's share price had dropped 73.5% in the two years before they sold out. The shareholders were grateful to grab H&F's cash to stem their own losses. There were no counterbids to H&F's offer.

http://www.forbes.com/2008/02/25/getty-hellman-friedman-update-equity-cx_md_0226-markets33.html


Interesting article and I agree it does state the drop in share price, however I stand by what I've always said about the company operating profits and that they were not operating at a loss:

http://www.advfn.com/p.php?pid=financials&btn=annual_reports&mode=&symbol=NYSE%3AGYI

Check out the 5yr trends, especially the total net income!


Istock wasn't sold to 'raise capital to expand'. It was sold to put $50M in Bruce's back-bin.


Personal opinion aside, according to interviews with Bruce Livingstone and Patrick Lor:

iStockphoto was able to support its operations for many years from the revenue generated by photo sales. However, during business planning in late 2005, the company realized that they needed about $10 million to meet their future growth expectations, including $3 million for hardware expansion costs. With this new capital requirement, the iStockphoto management team sought venture funding for the first time. After securing a term sheet from a VC, management became hesitant that this was the best option for the company. The team feared that they would not be able to maintain product control or nurture the community in the same fashion that iStockphoto had been built upon. Thus Bruce decided to seek other options, and contacted Jonathan Klein, CEO of Getty Images. After some positive conversations regarding company strategy and cultural fit, iStockphoto was sold to Getty Images in February 2006 for $50 million in cash. This represented a valuation substantially higher than the valuation placed on the company by the proposed VC investment. Hence the sale to Getty Images made both financial and cultural sense for Bruce and the rest of the iStockphoto team.
« Last Edit: September 13, 2010, 13:09 by RT »

« Reply #63 on: September 13, 2010, 13:54 »
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^^^ Oh no, Getty weren't actually operating at a loss but the trend for sales and profits was decidly south and lots of redundancys had taken place too.

I read Brucie's spin at the time but it doesn't really make sense to me. If he'd had full confidence in the company's future he surely wouldn't have sold his own stake? Maybe he bottled it or maybe he had no choice in the matter. If he didn't own more than 50% of the shares it could have sold by those that did __ that happens all the time (especially when VC's are involved).

RT


« Reply #64 on: September 13, 2010, 14:03 »
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Who wouldn't have made the same choice, you start a company that does well, you want to expand and talk to some VC about getting $10-15m, then after some business advice from a 'friend' who's in the industry they turn round and offer you $50m in the hand for your company with a sugar coated turd about how you can stay on and guide the business along the ethos in which you started it, after a while you realise they couldn't give a toss about your ethos, so you pack up and leave, a little bit upset but extremely rich.
« Last Edit: September 13, 2010, 14:09 by RT »

Microbius

« Reply #65 on: September 13, 2010, 14:07 »
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Slightly OT (my apologies), but I am wondering for what period of time Mr. Bruce's no compete clause was for?

Maybe it is high time that 'Bitter' got back into the game and give Getty a black eye.

That sell out MF can bite me. If I never hear his name again it'll be too soon.

« Reply #66 on: September 13, 2010, 14:50 »
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That sell out MF can bite me. If I never hear his name again it'll be too soon.

+1

alias

« Reply #67 on: September 13, 2010, 15:07 »
0
That sell out MF can bite me. If I never hear his name again it'll be too soon.
+1

It's sad that someone would say that. Thanks to Bruce Livingstone and his friends there are more opportunities to become involved in selling stock.

None of the other sites would have existed either.

lisafx

« Reply #68 on: September 13, 2010, 15:24 »
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Here's the funniest, and most accurate account of what has actually happened that I have read, posted by Kelvinjay - fourth post down:

http://www.istockphoto.com/forum_messages.php?threadid=253522&page=77

Hopefully it won't be a problem if I repost it here? 

"You don't seem to be taking the hint. They've F'd us in the A, rolled over, farted and are reaching for their cigarettes. They don't want some cosy post coital chat. They're just hoping you will realise how embarrassing the whole situation is, take the couple of dollars they've left on the bedside table, get dressed and do the walk of shame."

« Reply #69 on: September 13, 2010, 15:26 »
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Getty was in trouble.  Analysts downgraded them over and over.  Got bought out because they couldn't thrive at all.

New competent owners controlled their direction, bought iStock for growth.  Bottom line, they win.  They made the company better, maybe marginally, maybe more.  Don't try to spin this as anything else as a takeover to fix operations, make the company profitable and spin around.  iStockphoto just became part of that plan when they realized that it would help make it all work even more.

« Reply #70 on: September 13, 2010, 15:34 »
0
Slightly OT (my apologies), but I am wondering for what period of time Mr. Bruce's no compete clause was for?

Maybe it is high time that 'Bitter' got back into the game and give Getty a black eye.

how many people would support a new agency that paid 20%, I dont see him paying anymore than that

lagereek

« Reply #71 on: September 13, 2010, 15:50 »
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IS,  is the only company within the Getty sphere that shows any profit. Further,  its totally naive to think that all this global mayhem is because of such a small thing as exclusivity.
If exclusivity was the case,  all Getty would have to do is to say: look guys you get six month to either go exclusiv or get out. They did that in the film days, long before they bought IS.
Its been said before,  exclusivity in an RF world with some 100 million files floating around everywhere?  well judge it for yourself:  it means absoloutely nothing. It sound good, doesnt it and especially if youre a buyer.
IS,  is a good company that at the moment is getting chronically short-changed by Getty who in their turn is getting short-changed by these Hellman bankers or whatever.
Its the turning of the screw.
« Last Edit: September 13, 2010, 15:52 by lagereek »

« Reply #72 on: September 13, 2010, 15:53 »
0
IS,  is the only company within the Getty sphere that shows any profit. Further,  its totally naive to think that all this global mayhem is because of such a small thing as exclusivity.
If exclusivity was the case,  all Getty would have to do is to say: look guys you get six month to either go exclusiv or get out. They did that in the film days, long before they bought IS.
Its been said before,  exclusivity in an RF world with some 100 million files floating around everywhere?  well judge it for yourself:  it means absoloutely nothing. It sound good, doesnt it and especially if youre a buyer.
IS,  is a good company that at the moment is getting chronically short-changed by Getty who in their turn is getting short-changed by these Hellman bankers or whatever.
Its the turning of the screw.

independents are the reason i can have my exclusivity - so thank you - because if you guys didn't bring down the average royalty, i wouldn't be so lucky to get what I get. 

Microbius

« Reply #73 on: September 13, 2010, 15:55 »
0
That sell out MF can bite me. If I never hear his name again it'll be too soon.
+1

It's sad that someone would say that. Thanks to Bruce Livingstone and his friends there are more opportunities to become involved in selling stock.

None of the other sites would have existed either.
It sad that someone would sell out his contributors to a company with a track record for buying out and butchering the competition, but there you go.
P.S. many of his "friends" are the ones getting corn-holed by Getty right now

lagereek

« Reply #74 on: September 13, 2010, 16:05 »
0
IS,  is the only company within the Getty sphere that shows any profit. Further,  its totally naive to think that all this global mayhem is because of such a small thing as exclusivity.
If exclusivity was the case,  all Getty would have to do is to say: look guys you get six month to either go exclusiv or get out. They did that in the film days, long before they bought IS.
Its been said before,  exclusivity in an RF world with some 100 million files floating around everywhere?  well judge it for yourself:  it means absoloutely nothing. It sound good, doesnt it and especially if youre a buyer.
IS,  is a good company that at the moment is getting chronically short-changed by Getty who in their turn is getting short-changed by these Hellman bankers or whatever.
Its the turning of the screw.

independents are the reason i can have my exclusivity - so thank you - because if you guys didn't bring down the average royalty, i wouldn't be so lucky to get what I get. 

I know and if you  guys didnt exist I wouldnt earn 50 times that much,  so Im very greatful indeed.


 

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