cthoman's video said it all...

ROFLMAO!!  Yes, that sums it up

 

imagine shank_ali as a moderator at IS

With the clarity of hindsight I'm seeing RCs or something similar as having been inevitable in the circumstances. Just a shame about the attendant bogosity.

They were only inevitable in terms of corporate greed and owners wanting to increase their share of the take probably to fund their decision to raid the company by raising a massive loan to be paid to the owners. There is nothing unsustainable about an overall 40% royalty rate, Alamy pays better than that on every single sale and has enough left over to run a medical research institute as a charitable institution.

To the best of my belief there is no such thing in economics as a "rate of profit", so that can neither fall nor rise. It's very possible that iStock is seeing falling profits despite - maybe because of - its efforts to squeeze more from artists and customers alike by raising prices and cutting commissions.

I'm surprised that corporate greed should be thought of as optional. Once the money men are running you, greed is institutional -- not just here but everywhere. It's the glory of the free market system. With everyone competing to maximize profit,  the system is supposed to allocate production and consumption resources with great efficiency.

Sorry, declining rate of profit is a woolly old marxist term. I should have said "shrinking bottom line" -- the cumulative rise in old canister percentage rates would have eroded iStock's profit, with the prospect of erosion by even bigger percentages in the coming years. All else being equal, of course.

I'm surprised that corporate greed should be thought of as optional. Once the money men are running you, greed is institutional -- not just here but everywhere. It's the glory of the free market system. With everyone competing to maximize profit,  the system is supposed to allocate production and consumption resources with great efficiency.

Sorry, declining rate of profit is a woolly old marxist term. I should have said "shrinking bottom line" -- the cumulative rise in old canister percentage rates would have eroded iStock's profit, with the prospect of erosion by even bigger percentages in the coming years. All else being equal, of course.

good summary Don, I think it is as simple as that unfortunately. I guess the big question is what happens when artists are pushed into cohesion because we can no longer afford to have our profits eroding year to year (as though we can afford it now). good to see you here....also good to see this thread has turned into a discussion worth having.

I'm surprised that corporate greed should be thought of as optional. Once the money men are running you, greed is institutional -- not just here but everywhere. It's the glory of the free market system. With everyone competing to maximize profit,  the system is supposed to allocate production and consumption resources with great efficiency.

Sorry, declining rate of profit is a woolly old marxist term. I should have said "shrinking bottom line" -- the cumulative rise in old canister percentage rates would have eroded iStock's profit, with the prospect of erosion by even bigger percentages in the coming years. All else being equal, of course.

I really don't think the old canister system would have significantly eroded istock's bottom line. The constant influx of new members supplying images for 20% commission helped to balance the very gradual increase in  members achieving the top rate. The bottom line depends primarily on the amount of money customers are spending, as long as iStock could grow that, then the bottom line would grow regardless of canisters.

The new system allows iStock to fix the exact overall commission rate it is paying, which is presumably 20%  in line with Getty's aims, rather than maybe 25% or 30% under the old system. But now they have achieved that, the only way they can "grow profitability" from this source in future is to cut payments to less than the target level.

If they hold commission averages to 20%, then the bottom line can only grow as a result of increased customer spend, which effectively means pulling in new customers or persuading existing ones to spend more, which assumes they are not working within budgets. The odd thing, is that people say they are no longer advertising the iStock brand in trade publications, which suggests they have abandoned hope of growing the customer base (or would rather send it elsewhere).

But, yes, if you take the aim to be to maximise every revenue stream to boost profits, the RC system - or a flat rate 20% for all - may have been inevitable. Maybe the next shift will be 20% flat rate, with Vetta and access to Getty being the exclusive perks.  Who knows? Or maybe it will be 15% all round. Would you then, after some thought, say that "it was inevitable" because they might just get away with it?

The problem at the moment is that they are trying to roast the outlying bits of the goose that lays golden eggs, assuming that they can maintain egg-production while simultaneously feasting on the wing-tips and other peripheral parts of the bird. That's not inevitable, it's short-sighted and stupid.

I really don't think the old canister system would have significantly eroded istock's bottom line. The constant influx of new members supplying images for 20% commission helped to balance the very gradual increase in  members achieving the top rate.

Yes, the influx is certainly palliative. But there are hundreds of diamonds now. I'll bet they, and the golds hurrying to join them, are selling a disproportionately large chunk of the images on iStock and skewing the average royalty rate upwards. Soon there would have been thousands of diamonds, all selling bunches of images for 40% royalties. A cost factor designed to increase! I reckon it could hurt when you're trying to make a company look good for a sale or IPO.

The bottom line depends primarily on the amount of money customers are spending, as long as iStock could grow that, then the bottom line would grow regardless of canisters.

Yes, but that's an independent variable.

The new system allows iStock to fix the exact overall commission rate it is paying, which is presumably 20%  in line with Getty's aims, rather than maybe 25% or 30% under the old system. But now they have achieved that, the only way they can "grow profitability" from this source in future is to cut payments to less than the target level.

Yes, ugh, it's an automatic photographer-squeezing apparatus. No doubt they'll try further experimental squeezes to gauge the reaction.

The problem at the moment is that they are trying to roast the outlying bits of the goose that lays golden eggs, assuming that they can maintain egg-production while simultaneously feasting on the wing-tips and other peripheral parts of the bird. That's not inevitable, it's short-sighted and stupid.

Our goose is cooked.

I don't imagine there are thousands of diamonds waitings in the gold wings. 95% of the stuff I see from newish peeps is available in mass amounts already.

Quote from: cthoman on July 16, 2011, 18:41

It's hard to believe it was necessary for non-exlcusives no matter how you slice it. I'm not a super earner there, but iStock's share of my earnings last year could pay somebody's salary. My share on the other hand doesn't even cover my mortgage.

taking for granted the portion I don't see...holy cow, when you put it that way, it's so true...crazy.

I think the sad fact of it is that iStock could have easily crushed their competition with moves in the opposite direction. Paying a flat 50% to all exclusives might have pulled all the fence sitters into exclusivity (myself included). I don't know if I'd want to go full exclusive now, but I'd probably make a deal with IS to dump their major competition for 50% of the share. I'd still want to be able to have my own site to sell through though. That deal is never going to be offered, so I guess I'll never have to be tempted. 

I would prefer image exclusivity to artist exclusivity...

Don's here and speaking with assurance and clarity as normal  .
The pill has been swallowed.The RC's targets are posted and clear.Istockphoto now have the control back.
Let's not forget the people who tell us things via the Istock forum are not business people and as such make remarks and comments that lack clarity or any assurance.
Communication will continue to be a problem unless there is better liason between the company and the community of artists.Terry J said as much in London.Hope it was taken onboard !

I'm a business person, shank. Are you one? How many companies have you run?

I'm good at minding other people business not so sure about my own.What point are you trying to make.Have you run a microstock business before or are you telling me a guy who owns a newsagent can run also  an hotel chain in Dubai.Respond quickly as i need to shower and have my breakfast.Busy day ahead....