Things at istock are so out of hand that I almost cannot believe what I hear:

1.. Scam site selling cheaply
2.. Images being given away at microsoft
3.. Images being given away on google
4.. Obscure financial manipulations such as currency hedging and retro payments
5.. Countless lies and unkept promises.

It is almost like the istock HQ deliberately tries to selfdestruct the company in the most efficient way.
OR... like istock is being sabotaged by someone, a group of former employees maybe?

What is going on?

I really think Getty is trying to run it into the ground

I think you're underestimating just how idiotic some companies can be.

I think it's most likely that they are increasingly desperate as things "aren't working" and continue to try new ways to try and wring more cash out of what used to be a healthy business.

The fact that this may hurt a lot of talented contributors is very sad, but this is private equity doing what it does best - grabbing the money and not worrying about the future of the business. It'd look better in the annual report if there was a happy ending, but they'll just blame it on the business, not their own actions, if it fails.

Maybe the business was never healthy?

It might have been profitable at a certain time, but thats not the same as healthy.
Pyramid games can also be profitable at a certain time.

I can easily imagine a exponential growth in both revenue and employees, I can also imagine an overflow of easy money at a certain time and what that might result in in unhealthy business decisions and not to mention incompetent employees and management (do what you want, it doesnt matter, we earn tons of money anyway).
And that can actually be verified by looking at the contributor side: easy money earned has locked many a good photographer into an unhealthy dependancy or at least an unwillingness to part from the leach, I am one my self.
I can easily imagine how the financial crisis struck hard, and and how the business suddently became less profitable and  I can also easily imagine how 100 relaxed "creative" people with big egos and yuppie attitudes, having never met defeat before, eagerly and easily turned to the cheapest of means to keep the profit from going down.
It is characteristic, that those cheapest of means, are only possible, because we, the creators of content, are a bewildered flock of sheep and because the agency operates globally outside the rule of law.
Only following Lex istock.
Which is the lousiest lex I have seen in many years, and I have been in a huge global cooperation that traded with for example South Sudan, Mali and Kazakhstan.

I want the law to apply to istock!
I want the swindel to stop!
I want those people punished for their illegal acts!
Not to mention moral.

That aside, there is much evidence that it seems a deliberate act for the company to commit suicide.