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Author Topic: If royalties paid out have dropped by 0.1%...  (Read 3619 times)

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« on: May 07, 2011, 10:08 »
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...how much do you reckon commissions have gone up by?

In Kelly's note on the iStock forums (www.istockphoto.com/forum_messages.php?threadid=328488&page=4) to correct the recent CNET article, he said that 'The fraction of a percent was definitely about the total change in royalties paid out, not the number of people it affected'.  The fraction given in the article was 0.1% (though looks like it's now been edited out of the article).  Presumably the change was downwards, but I don't think that was actually specified.

Given that since September...
- Non-exclusive royalties dropped from 20% to 15-20%
- Royalty rates for many exclusive contributors dropped down one or more levels.  Some contributors saw their royalty percentages go up.
- Vetta royalties dropped for all participating contributors, from 25-40% to 22-30%, while the Vetta price went up significantly.
- Agency sales were introduced at the same royalty level as Vetta but at a significantly higher price.
- There was an influx of external Agency content.  Don't know what iStock's commission for those is, but it's thought by many to be 80%.
- 100% royalty day was dropped
- The extra 10% royalty on Extended Licenses for exclusives was dropped
- Exclusive+ prices have gone up significanly, and the proportion of E+ files has gone up.
- Minimum subscription payouts went down significantly

Those are off the top of my head, I probably missed out a few important ones there.

Obviously we'll never know, but given that royalties paid out have changed by 0.1%, how much would you guesstimate that iStock's takings increased by? :)


helix7

« Reply #1 on: May 07, 2011, 11:04 »
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I don't even believe that royalties paid out changed by so little. It's nearly impossible that Kelly's number is accurate considering how hard the royalty change hit most people.

This is a total guess, but I'd imagine that if (based on the previous royalty model) istock never took more than 80% and now they take more than 80% from the majority of contributors, factoring in exclusive rates and how those tip the average, I'd venture a wild guess that istock's average cut went from something in the low 70s to something in the upper 70s. Probably around 76-78%. In other words, it wouldn't surprise me if istock managed to give themselves a 5% boost in profits with the royalty change alone.

All things considered, I think istock is close to 80% profitability on average. Or it would seem that might be the number they are working towards. Makes sense knowing how things work over at Getty, and that the top brass would probably like to see istock operating at similar levels.

Just a wild guess, of course, but somehow I doubt I'm off by much.

 

« Reply #2 on: May 07, 2011, 11:23 »
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Way back in 2007, iStock's average payout was 29% (as revealed by Bruce Livingstone and discussed by Lee Torrens here: http://www.microstockdiaries.com/peek-inside-the-financials-of-istockphoto.html).

That was back in the days when iStock was on an unsustainable trajectory, supposedly without the rising profitability that 'all businesses should have'.  Hmm, wonder how many iStock artists have been watching their profitability rising of late  :o

Not sure if I'd say that iStock have managed to claw the overall percentage back to 80% commission, but I'd definitely guess that the average payout is now a lot lower than 29%.

For me, a huge surge in commission must have come from Vetta and Agency sales, which have been pushed relentlessly with apparently very little or no concern for the consequences.

At some sizes the prices are more than eight times higher than files in the exclusive collection.  Add a massive price increase to a big royalty reduction, and the increased commission take must be staggering.

« Reply #3 on: May 07, 2011, 11:36 »
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and we all pretty much settled down too.

If the payouts have barely changed (less than .1%), that means that for most people their RC count should be higher (lower %, same payouts). Maybe that is so, but it doesn't seem that way for me. Look forward to higher RC #s for this year if this is true.

It would be interesting to see their real books.

« Reply #4 on: May 07, 2011, 12:45 »
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and we all pretty much settled down too.

If the payouts have barely changed (less than .1%), that means that for most people their RC count should be higher (lower %, same payouts). Maybe that is so, but it doesn't seem that way for me. Look forward to higher RC #s for this year if this is true.

It would be interesting to see their real books.

Having conceded that payouts have fallen slightly, I think any rise in RC targets would not be met kindly, to put it very mildly.  But hey, that never put them off before.  But they certainly might need to lock a lot more threads and ban a lot more users from the forums to give that illusion of a site where everyone has "sort of settled down".

Seems to me all they really care about is finding the balance where they can profit the most from our work.

Gear things too high and they risk artists leaving in significant numbers.  Gear things too low and they risk paying money to artists which they could have taken for themselves.

« Reply #5 on: May 07, 2011, 13:44 »
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Kelly's assertion that the net change was a + .1% in increase decrease in royalties for Istock contributors is just nonsense.  Would Istock have put the entire community through what they did for .1%???  They could have achieved a greater outcome with a .2% increase in prices.

And as the OP points out there were all these other changes at the same time that took money from contributors pockets and put it into Istock's.  

If the net change is .1% somebody is getting a lot more in royalties then they were before.  So who is getting paid all that money?  Base/Bronze/Silver contributors who are getting paid at diamond levels because they sold that many Vetta images last year?   ::)

edited per pancaketom's point (I'd not had coffee yet)
« Last Edit: May 07, 2011, 19:15 by Sadstock »

« Reply #6 on: May 07, 2011, 16:14 »
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I assumed the .1% change was what IS paid to the contributors, and IS is taking more for now (and total downloads have dropped).

« Reply #7 on: May 08, 2011, 01:16 »
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The only way the payment to contributors could be essentially the same is if iStock's income has risen enormously. That could only happen if buyers are spending more. Since there is general acceptance that sales are well down, the extra money must be going into V/A file sales. Which means people with Vetta should be seeing a huge boost to their income - though I'm not seeing reports of that.

The other possibility is that we've not been told the truth.

« Reply #8 on: May 08, 2011, 04:44 »
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The only way the payment to contributors could be essentially the same is if iStock's income has risen enormously. That could only happen if buyers are spending more. Since there is general acceptance that sales are well down, the extra money must be going into V/A file sales. Which means people with Vetta should be seeing a huge boost to their income - though I'm not seeing reports of that.

The other possibility is that we've not been told the truth.


Completely agree - given the huge shift of balance from artist royalties --> iStock commissions since September, if Kelly's statement is true the conclusion must be that iStockphoto's commissions have soared.

Which would mean that iStock have 99 problems, but profitability ain't one.

And that iStock's artists have 100 problems, with falling profitability right at the top  :-\

Kelly's method of judging 'falling profitability' was not about actual profits, but about the percentages paid out:

From the Royalty Change Follow-up thread (www.istockphoto.com/forum_messages.php?threadid=252322&page=1)...
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.

Well now that's fixed  ::)

But on that same basis, even artists who are seeing their income rising should know that their profitability is falling.  In Kelly's words, "as a business model it's simply unsustainable".  Is that a long-term problem that needs to be addressed?  Maybe Kelly just forgot to tell us the 'Artists businesses should get less profitable as iStockphoto grows' bit.

helix7

« Reply #9 on: May 08, 2011, 18:06 »
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...The other possibility is that we've not been told the truth.

Bingo.

« Reply #10 on: May 08, 2011, 19:34 »
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The only way the payment to contributors could be essentially the same is if iStock's income has risen enormously. That could only happen if buyers are spending more. Since there is general acceptance that sales are well down, the extra money must be going into V/A file sales. Which means people with Vetta should be seeing a huge boost to their income - though I'm not seeing reports of that.

The other possibility is that we've not been told the truth.

Didnt vetta sales used to have a 10% bonus?  That went away so vetta artists actually are getting less on each sale


 

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