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Author Topic: Amazon vs. publishers - and what it says about us  (Read 9090 times)

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EmberMike

« on: May 28, 2014, 09:23 »
+29
Warning: This is mostly a rant.

Amazon has gotten some press lately about a dispute with book publisher Hachette. There is plenty to read about the dispute and I won't get too much into the details, but basically Hachette wants Amazon to sell e-books at full MSRP, Amazon wants to discount books as they see fit (and still compensate publishers their full cut), and this has thrown the Amazon/Hachette relationship into disarray.

For a pretty concise and realistic assessment of the situation, my favorite author Hugh Howey has some really good thoughts on the matter.

There are a lot of interesting things about this dispute. But as it relates to us, what I've found most interesting is that Amazon generally keeps 30-40% of e-book sales. They also ask publishers to be willing to discount their e-books by 30% below print book sales. Which I think is fair given the fact that an e-book is digital delivery vs. a print book which is physical. Typically Amazon's preferred price point for e-books is $9.99 and under, in which case the publisher (or independent author) gets the full 70% of each sale. Publishers/authors can set their own pricing below $9.99 and still get the full 70%. So for example in the case of the author mentioned above, he prices some of his e-books on Amazon at $5.99 and he makes $4.20 on each sale.

We all know that Apple has a similar arrangement with publishers, authors, app developers, etc. They take 30% of every sale.

How did we get so backwards in the stock image business? Or more to the point of the title of this thread, what does this say about us?

Well, I don't think it really even needs saying, but frankly I think this says that we're a bunch of suckers.

I really don't care what any agency says or what any financial report says about what these companies "need" in order to sell our images. The fact is (and yes it is a fact) that they should not be getting any more than 30% of each sale, nor do they need any more than that. This is the simplest product in the world to sell in a digital economy. It's photo downloads. It's simpler than book sales, that's for sure. There are no e-readers, no special formatting, they just push a JPG or EPS file down the pipe and it's a done deal. Simple.

And yet we're completely upside down in this business. Instead of the agencies getting 30%, in most cases that's our cut. Sometimes even less. It's insanity.

Thomas Hawk famously quit Getty last year and has been known to refer to Getty's 20% royalty to artists as "highway robbery". He's right. Hawk has since moved on to Stocksy, a markedly better arrangement for him compared to what Getty offers, but let's be real about this; even 50% isn't great. It's better, but it's still below what seems to be standard for most other forms of digital content delivery.

I'm not sure what the point of this post is. As mentioned above it's mostly a rant. But I hope it might serve as a small reminder that we are constantly getting screwed in this business by absolutely everyone, even the supposedly "fair" companies, and somehow we need to try and shift the balance a bit. I don't expect that we'll ever get 60-70% per sale across the board. We're too far down this rabbit hole to ever climb back up that high.

But how about we start here: Any would-be new agency comes knocking, the terms are 50% or don't bother even asking for my images. I don't care if you're name is Google. 50% or don't bother.

50% shouldn't be regarded as a great deal. 50% should be the minimum.

« Last Edit: May 28, 2014, 09:40 by EmberMike »


Shelma1

« Reply #1 on: May 28, 2014, 10:03 »
+3
Yep. At least for headhunters and independent artists' reps, they usually take a 20% commission, and that commission is added to the person's salary or the price of their art. So if you're taking a job making $100K per year, you get that 100K, the headhunter gets 20K, and the employer pays out 120K the first year of employment. It's still shocking to me that it's completely upside down in the world of stock images. In fact, until recently I assumed that the big macro stock houses, like Getty, for example, only took 20%. I think all my colleagues probably assume that as well.

« Reply #2 on: May 28, 2014, 11:06 »
+6
I've been watching/reading about the battles between amazon and publishers. Also some spats in the music business -- in that case where a proposed deal to improve/streamline royalty payments from music users to record labels had songwriters stepping in to complain they were not getting their fair share.

In the amazon dust up, the thing that struck me most was just how (a) anti-consumer and (b) brutal amazon was in the "negotiations". The idea that they were marking books as taking 2-3 weeks to deliver as a way to bring the publishers to heel really p*ssed me off. They seem to take my business (as a customer) so much for granted that they're willing to make life unpleasant for me as part of their internal business dealings. Then there was the nagging worries that once a business gets big/dominant enough, they treat everyone - customers and suppliers - like dirt.

Being treated badly by the agencies - not just people like me by the micros, but lots and lots of agencies and photographers over many years by Getty - is made so much easier when one business gets very big and dominant.

In general, I'm concerned about too much regulation of business, but there are so many examples of how despicably they behave if given a free hand, that wage and hour laws, OSHA (for the US) seem to be necessary to avoid abuses.  I can't see market forces fixing the unfair practices of stock agencies. Right now, I can't see any appetite for increased regulation (even for US-based businesses).

I think the Apple and Amazon comparisons aren't entirely a match with the stock business - in both those cases, the app store/kindle books are ways for them to sell more of their devices (from which they also make a profit. In the stock agency cases, there are no other devices in the ecosystem fueling company profits.

I'm less concerned with a particular percentage than with sales volume and market growth. If an agency was investing in growing the business with their share, I'd benefit from that. When the cash is just paying off the parasitic private equity owners (or is in other ways just being siphoned off to enrich someone), suppliers and customers lose.

« Reply #3 on: May 28, 2014, 12:30 »
+5
... Well, I don't think it really even needs saying, but frankly I think this says that we're a bunch of suckers.
... let's be real about this; even 50% isn't great. It's better, but ...

... But how about we start here: Any would-be new agency comes knocking, the terms are 50% or don't bother even asking for my images. I don't care if you're name is Google. 50% or don't bother.

50% shouldn't be regarded as a great deal. 50% should be the minimum.

AMEN!!!

« Reply #4 on: May 28, 2014, 12:43 »
+3
I think in general the sites are either pocketing a good bit of their percentage or using it to try to take buyers from other sites (that often would pay us better).

History has definitely shown that w/o some checks from either the govt, unions, competition, or people with torches and pitchforks businesses will behave poorly.

« Reply #5 on: May 28, 2014, 13:25 »
0
Just to play devil's advocate for a second: Photo files are significantly larger than e-books, so bandwidth cost is higher for stock agencies. With that being said, they still don't deserve more than 40% of total price, leaving the majority to the content creator.

« Reply #6 on: May 28, 2014, 13:31 »
+3
No, they don't sell books to sell kindles. At least that's is what I read in a interview with Bezos. They sell kindles, quite cheap and witth little benefit margins to sell books. You can a sell a new kindle to a customer every three or four years, maybe; you can sell books to this customer every week.

EmberMike

« Reply #7 on: May 28, 2014, 15:38 »
+1
Just to play devil's advocate for a second: Photo files are significantly larger than e-books, so bandwidth cost is higher for stock agencies. With that being said, they still don't deserve more than 40% of total price, leaving the majority to the content creator.

Bandwidth isn't the issue. A few companies do offer 70% royalties, and while they're not super successful they do manages to get by. If bandwidth costs were a major factor in what royalty percentage they could offer, no one would offer more than 50%.

I think the fact that anyone does offer more than 50% is all the proof I need to know that 50% or more isn't just possible but it can still be profitable for these companies as well. If they're running lean businesses on their end of things, which I suspect is where the real problems are.

ShadySue

  • There is a crack in everything
« Reply #8 on: May 28, 2014, 15:57 »
+3
Funnily enough, there was a discussion on a programme I wasn't really watching on TV earlier this evening urging people to buy artwork directly from artists, not from galleries, as the galleries take a ridiculous amount.

Shelma1

« Reply #9 on: May 28, 2014, 16:04 »
+2
Yes, here's a blog post about how art galleries have raised their commissions. It seems to be epidemic in all forms of the arts. (There is a placement service that one ad agency I worked with used to use, until I freelance writer we hired told me what a tiny rate he was getting. That's when I realized what a huge commission they were taking (about 50%). I never used them again.)

http://faso.com/fineartviews/11610/negotiating-with-art-galleries-part-2

« Reply #10 on: May 28, 2014, 23:57 »
0
Just to play devil's advocate for a second: Photo files are significantly larger than e-books, so bandwidth cost is higher for stock agencies. With that being said, they still don't deserve more than 40% of total price, leaving the majority to the content creator.

Bandwidth isn't the issue. A few companies do offer 70% royalties, and while they're not super successful they do manages to get by. If bandwidth costs were a major factor in what royalty percentage they could offer, no one would offer more than 50%.

I think the fact that anyone does offer more than 50% is all the proof I need to know that 50% or more isn't just possible but it can still be profitable for these companies as well. If they're running lean businesses on their end of things, which I suspect is where the real problems are.

I was only pointing out that photos have a much larger file size than ebooks, not suggesting that bandwidth was the only reason that the agencies rip us off.  :(

BoBoBolinski

« Reply #11 on: May 30, 2014, 02:40 »
0
They rip us off because they can. What ( seriously) can we do about it? I rely on my stock income to pay my bills.

« Reply #12 on: May 30, 2014, 09:33 »
+3
They rip us off because they can. What ( seriously) can we do about it? I rely on my stock income to pay my bills.



Prevention through education.


Campaigns that effectively warn against joining agencies with unsatisfactory commission percentages and contributor relations would likely have higher success rate than campaigns to get contributors to leave.


Yes, there will be many potential contributors who can't or won't be reached, influenced that way - but I believe a TIPPING POINT can be reached, where agencies stop assuming desirable contributors will accept downward spiraling, wildly unreasonable compensation and terms


<A bit similar to how efforts to prevent others from starting to use heroin are likely more successful than efforts to get users to quit.>


- Ann
 

« Reply #13 on: May 30, 2014, 21:06 »
+3
None of us has dealt with the day to day expenses of running a stock company. However Bruce Livingstone/IS ran a successful micro company for a number of years and he has the data and experience to give great advice regarding realistic and fair contributor royalty compensation.

Here is what he had to say about the situation and you have give him a shout out for being honest with us.

Snip

Bruce Livingstone

With a 50% cut, there is plenty of money for good salaries and to properly market a product. Every photographer should know this and understand that if they get anything less than 50%, they're not being fairly paid.

I hope that photographers will demand more for their work. I hope that big agencies will wake up and realize they're lost without their artists and they need to do treat people better.

I hope they focus on making a good product, not a good profit. The reality is that this situation is going to get worse before it gets better. Photographers will earn less and continue to compete in a sea of competition as the big stock houses load more and more bad stock images.

http://tinyurl.com/o8ln76p

EmberMike

« Reply #14 on: May 30, 2014, 22:12 »
+2
Quote from: Bruce Livingstone
With a 50% cut, there is plenty of money for good salaries and to properly market a product. Every photographer should know this and understand that if they get anything less than 50%, they're not being fairly paid.

I don't think there's any going back on this now. As much as I completely agree that anything less than 50% is getting ripped off, these big companies are so dependent on the systems they've built that you really couldn't flip a switch on royalties and bump everyone up to 50% without killing the company. I think the fair royalty has to be there from the beginning.

But it can work, even when a small company grows into big one. It just has to be a part of the company culture from day 1.

And when a company gets big it means that they need to have a few less quarter-million-dollar and half-million-dollar salaries, cut the bloat, operate a bit leaner. But it can be done.

All we can do now is make it a part of our contributor culture to never again accept less than 50%. Like I said in my original post, if some new company comes asking for my work, it's 50% or it's not going to happen. I'm not interested.

Maybe we're all complicit in the state of things today by accepting these poor deals years ago. But that doesn't mean that we have to keep repeating the same mistakes. There is still room for new blood in this business. None of these current companies are perfect, and there is certainly room for improvement. I actually think that adopting a 50% (or more) royalty for contributors right from the start is part of what will make a new company stronger than the competition. It's helped Stocksy attract talent that previously wouldn't work with these companies.

But even Stocksy isn't perfect. There are things they could do better (ahem.. *cough* illustration *cough* *cough*). Stocksy also isn't really even aimed at taking a shot at Shutterstock or iStock. They're more niche and it seems intentional.

Someone will get it completely right one day with a company that is equipped to take a shot at any of the big players, and that company is going turn this whole thing upside down and reboot it.
« Last Edit: May 30, 2014, 22:19 by EmberMike »

« Reply #15 on: May 31, 2014, 05:36 »
+1
Stocksy also isn't really even aimed at taking a shot at Shutterstock or iStock. They're more niche and it seems intentional.

Exactly. Stocksy is a boutique selling small quantities of hand picked content. It is completely different from microstock. It's like a farm shop.

We increasingly live in a world of images shared amongst peers and unencumbered by rights issues. The legacy microstock model is under pressure as ever more free content becomes available. Today many companies and organizations have moved their active web presence to the social media. Many former microstock clients can today get along perfectly well with free content shot and shared by their followers on their ever better quality iPhones. Many  organizations never really needed a website anyhow and get along much better by having their customers as Facebook friends. And whatever comes after Facebook.

The legacy microstock sites have to find new ways of making their millions of images ever better value to the remaining clients. Inevitably that will mean making deals which will irritate legacy contributors who were used to being paid more. But there will be plenty of others quite happy to continue uploading. Especially as inspection standards are inevitably relaxed due to costs.

On another point - it's worth pointing out that most successful authors will only get a relatively small cut of their Kindle sales. Because most authors are represented by agents and publishers. It's the publishers who make the deals with Amazon in many cases. Granted some authors self publish - those who choose to are typically either very well established (they used to be published) or else self published success comes as a surprise and is exceptional.

« Reply #16 on: May 31, 2014, 12:31 »
0
Interesting opinion piece on the battle to rein in Amazon

http://www.nytimes.com/2014/05/31/opinion/how-book-publishers-can-beat-amazon.html

And a short interview with Malcolm Gladwell on the actions of his partner Amazon

http://bits.blogs.nytimes.com/2014/05/30/gladwell-on-amazon-its-sort-of-heartbreaking-when-your-partner-turns-on-you/

"Its sort of heartbreaking when your partner turns on you. Over the past 15 years, I have sold millions of dollars worth of books on Amazon, which means I have made millions of dollars for Amazon. I would have thought I was one of their best assets. I thought we were partners in a business that has done well. This seems an odd way to treat someone who has made you millions of dollars."

Except that the order of magnitude of the numbers is a bit different, it sound like very familiar territory...
« Last Edit: May 31, 2014, 12:44 by Jo Ann Snover »


« Reply #17 on: May 31, 2014, 13:43 »
+1
Quote from: Bruce Livingstone
With a 50% cut, there is plenty of money for good salaries and to properly market a product. Every photographer should know this and understand that if they get anything less than 50%, they're not being fairly paid.

I don't think there's any going back on this now. As much as I completely agree that anything less than 50% is getting ripped off, these big companies are so dependent on the systems they've built that you really couldn't flip a switch on royalties and bump everyone up to 50% without killing the company. I think the fair royalty has to be there from the beginning.

But it can work, even when a small company grows into big one. It just has to be a part of the company culture from day 1.

And when a company gets big it means that they need to have a few less quarter-million-dollar and half-million-dollar salaries, cut the bloat, operate a bit leaner. But it can be done.

All we can do now is make it a part of our contributor culture to never again accept less than 50%. Like I said in my original post, if some new company comes asking for my work, it's 50% or it's not going to happen. I'm not interested.

Maybe we're all complicit in the state of things today by accepting these poor deals years ago. But that doesn't mean that we have to keep repeating the same mistakes. There is still room for new blood in this business. None of these current companies are perfect, and there is certainly room for improvement. I actually think that adopting a 50% (or more) royalty for contributors right from the start is part of what will make a new company stronger than the competition. It's helped Stocksy attract talent that previously wouldn't work with these companies.

But even Stocksy isn't perfect. There are things they could do better (ahem.. *cough* illustration *cough* *cough*). Stocksy also isn't really even aimed at taking a shot at Shutterstock or iStock. They're more niche and it seems intentional.

Someone will get it completely right one day with a company that is equipped to take a shot at any of the big players, and that company is going turn this whole thing upside down and reboot it.

I don't think you can know that this is true without having access to day to day expenses at sites like istock, dreamstime, shutterstock etc. There is one person who has had access to this type of information and we know what his views on this topic are because he was willing to share his take on the subject with us.

Based on this input I do think these sites have room to compensate us fairly.


« Reply #18 on: May 31, 2014, 14:15 »
+1
I don't think you can know that this is true without having access to day to day expenses at sites like istock, dreamstime, shutterstock etc. There is one person who has had access to this type of information and we know what his views on this topic are because he was willing to share his take on the subject with us.

Based on this input I do think these sites have room to compensate us fairly.

According to Shutterstock's numbers in their reports, they wouldn't have enough money to pay contributors 50%. They'd have to adjust their budget.

« Reply #19 on: May 31, 2014, 16:06 »
-1
... if some new company comes asking for my work, it's 50% or it's not going to happen. I'm not interested.


Just thinking - if here comes new agency that offers you 50%, you take it! Price is 1$ so you take 0,50$, ok? But there comes another one, better, fair - pricing agency, that offers you 80%. Interested? Very! But the agency sells image for 0,50$. We know they need compete. Now you can get 0,50$ - 20%.
I mean, we never ever should forget about the reasonable minimum. We all scream about 50% but I can see nobody is asking what is the price.
Is it worth selling your RF (!) image for... what price is good today? What is the minimum?

If you could have a choice, let me ask you, what price would you like to get for the small and full size image in wide RF license? Would it still be 1$ as it is today? You (all) don't accept less than 50% but 1$ is accepted? Just hard to believe :)
« Last Edit: May 31, 2014, 16:09 by Ariene »

donding

  • Think before you speak
« Reply #20 on: May 31, 2014, 16:07 »
+1
From my viewpoint it seems the agencies that offer the larger commissions are usually not that successful. The sales are low and the profit is lower than we make at the larger agencies with lower commissions. I agree that we need to refuse to join an agency that offers less than 50% in the future, but will the one who offers the higher commissions become successful?

With these larger agencies it's like a trap that we can't get out of. They are established and make more sales.

The question is if one of these agencies that paid higher commissions become successful, how long would it take before the greed kicked in and slowly they take more and more? The successful ones did just that. So many photographers rely on these agencies for their living and most will not walk away because of that. That is what I refer to as a trap and I'm sure the larger agencies know this and therefore know these big earners will not walk away. It's the little guy who walks away and that doesn't really effect the sales of the agency.

Hobostocker

    This user is banned.
« Reply #21 on: June 01, 2014, 07:43 »
0
Fees are below 50% because it's increasingly hard to sell images.

If it was so easy to sell online then try it out yourseld, build your own site, and see how much you're required to invest in advertising.

Microstock in particular is a cut-throat business, there's a good reason if SS is spending up to half of its earning in marketing and advertising.

If it's hard for the market leaders why it should be any easier for the average stock photographer ?

EmberMike

« Reply #22 on: June 01, 2014, 08:40 »
+1
Just thinking - if here comes new agency that offers you 50%, you take it! Price is 1$ so you take 0,50$, ok? But there comes another one, better, fair - pricing agency, that offers you 80%. Interested? Very! But the agency sells image for 0,50$. We know they need compete. Now you can get 0,50$ - 20%.
I mean, we never ever should forget about the reasonable minimum. We all scream about 50% but I can see nobody is asking what is the price...

I figured it was understood that a reasonable minimum was always a part of this. Obviously no one will take a deal to sell images for $0.50. Just look at the response to Dollar Photo Club.

...If you could have a choice, let me ask you, what price would you like to get for the small and full size image in wide RF license? Would it still be 1$ as it is today? You (all) don't accept less than 50% but 1$ is accepted? Just hard to believe :)

I never said $1 would be acceptable.

I have stated elsewhere in this forum that I believe $10 is the sweet spot for microstock pricing for large images and vectors. I still believe that. I think there is room for even higher prices for certain kinds of imagery, but for general microstock pricing, I'd be pretty happy with $10 for every sale.

EmberMike

« Reply #23 on: June 01, 2014, 08:45 »
0
From my viewpoint it seems the agencies that offer the larger commissions are usually not that successful. The sales are low and the profit is lower than we make at the larger agencies with lower commissions. I agree that we need to refuse to join an agency that offers less than 50% in the future, but will the one who offers the higher commissions become successful?

There is no proof that agencies with larger commissions aren't successful because they pay more to contributors. Just because we have yet to see an agency hit the Top Tier while paying 50% or more doesn't mean it can't happen.

...The question is if one of these agencies that paid higher commissions become successful, how long would it take before the greed kicked in and slowly they take more and more? The successful ones did just that...

They all did that? Really? I don't recall Shutterstock ever cutting my pay. Or most of the other Top And Middle Tier companies either. iStock did, Fotolia did, who else? Envato raised my pay rate. Shutterstock used to give regular raises as well.

I never understood where this generalization comes from. Just because a few companies cut pay you've decided that all companies will do the same. When really there is no reason to believe that the majority of companies would do the same in a higher position in the market.

« Reply #24 on: June 01, 2014, 09:56 »
0
I don't think you can know that this is true without having access to day to day expenses at sites like istock, dreamstime, shutterstock etc. There is one person who has had access to this type of information and we know what his views on this topic are because he was willing to share his take on the subject with us.

Based on this input I do think these sites have room to compensate us fairly.


According to Shutterstock's numbers in their reports, they wouldn't have enough money to pay contributors 50%. They'd have to adjust their budget.


CO's & CFO's can be remarkably creative, if you have ever worked in a public company it is interesting to be included in financial meetings leading up to audits and the release of quarterly SEC reports.

Lets also remember that shutterstock has not raised it sub prices in 9 years with the publically stated intention of gaining market share. A strategy by the way, which has proven to be effective and consequentially detrimental to its competitors as well as it's contributors.

One of the biggest problems I have with SS is that their growth strategy comes at the expense of it's contributors as well as the larger micro and macro markets. They have openly admited that as a growth strategy, they are undercutting the pricing of existing micro as well as existing and higher paying micro/macro image and enterprise markets.

Snip
Duck Swartz

So whats changed in the marketplace thats giving you the opportunity to locate in the enterprise in a more, in a more robust way?

Timothy E. Bixby - CFO

The quality of the images has increased pretty dramatically over the past 10 years

So in the past five years the contents gone up to a level where the biggest publishers in the world mediated either starting to notice that is price, these images are not only price well, but they are also similar to some images that they have paid thousands of dollars for and also had to be on the phone for an hour negotiating the license for that image.

Snip

Duck Swartz

Talking about your present strategy longer term?

Timothy E. Bixby - CFO

We think we can raise the prices over the long term but were primary in the growth mode right now and we would like to continue to cover as much of the world as possible and take as much as growth in the business that we can before we play with the pricing level.

We havent raised prices in many years and thats been a great strategy so far to grow.


Snip
Jonathan Oringer - Founder, CEO & Chairman of the Board

It still multiples. So it's order of magnitude whether it's if you look at us compared to other stock marketplaces like an iStock or others, it's two or three or four times more expensive to not use Shutterstock. If you look at the higher end sort of more traditional marketed might be 6 or 8 or 10 times more expensive.

http://tinyurl.com/qcqszco
« Last Edit: June 01, 2014, 09:58 by gbalex »


 

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