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, it�s 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"

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.

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.

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, it�s 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?

Quote from: anc on September 09, 2010, 10:00

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, it�s 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.

Quote from: Elenathewise on September 09, 2010, 12:05

Quote from: anc on September 09, 2010, 10:00

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, it�s 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?

Quote from: Elenathewise on September 09, 2010, 12:05

Quote from: anc on September 09, 2010, 10:00

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, it�s 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...

.

.

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

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

Quote from: Kngkyle on September 09, 2010, 14:11

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

Quote from: FD-regular on September 09, 2010, 14:23

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.

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.