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Author Topic: Redeemed Credits from a business angle.....  (Read 13851 times)

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Shank_ali

    This user is banned.
« Reply #25 on: July 15, 2011, 16:26 »
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Let's be honest, non exclusives don't give a dam about Istockphoto for the most part, so they use an outside forum to belittle the company at every opportunity.
And iStock love their exclusives so much that they kick us off the forums at the random whim of a moderator.
He's not that bad but i aint getting a new personality and character to fit into what Istockphoto deems to be fitting !


lisafx

« Reply #26 on: July 15, 2011, 18:04 »
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cthoman's video said it all...

ROFLMAO!!  Yes, that sums it up :)

lisafx

« Reply #27 on: July 15, 2011, 18:13 »
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Let's be honest, non exclusives don't give a dam about Istockphoto for the most part, so they use an outside forum to belittle the company at every opportunity.


Poor Shanky.  I feel so bad for you, being forced to spend so much time here reading this forum, and completely unable to look away...  ;)


« Reply #28 on: July 16, 2011, 14:54 »
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 ;D ;D

imagine shank_ali as a moderator at IS :P

« Reply #29 on: July 16, 2011, 16:48 »
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I've got to confess that I can see why iStock introduced the RC system. Which is not to say I like it, or welcome it, or approve of the way it was done with economy of truth, or fail to narrow my eyes at the swiftly broken promise to the members with "grandfathered" canisters.

But I can see how a new money-hungry overlord, H&F/Getty in this case, would not put up with a royalty system that produced a steadily falling rate of profit for the company as ever more suppliers marched cumulatively into the higher royalty ranks. Sure, the worst possible endpoint rate of profit might still have made a Rockefeller sob with envy, but in business that's not the point -- the point is whether the numbers are going up or going down.

To insist that they must always go up is perhaps economic delusional psychosis but it is unfortunately the raison d'etre of our system. And venture capitalists are the most dogged economic optimizers around, who certainly won't permit droopy-looking numbers to embarrass them if they can help it.

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.

« Reply #30 on: July 16, 2011, 17:01 »
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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.

« Reply #31 on: July 16, 2011, 17:24 »
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Most groceries make 3-4% profit.

« Reply #32 on: July 16, 2011, 17:32 »
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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.

« Reply #33 on: July 16, 2011, 18:10 »
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Most groceries make 3-4% profit.

Yes, but that's all-in, overheads and all. We don't actually know iStock's profit figures. Perhaps they're spending zillions on servers and making payment of tribute to the Horned God. But we think they're fleecing us because we reckon they can keep overheads low enough to let them virtually print money. The truth is often thought to lie somewhere in between. Anyone have any financials on stock agencies?

SNP

  • Canadian Photographer
« Reply #34 on: July 16, 2011, 18:40 »
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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.

« Reply #35 on: July 16, 2011, 18:41 »
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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.

« Reply #36 on: July 16, 2011, 18:54 »
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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.

« Reply #37 on: July 16, 2011, 18:57 »
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Anyone have any financials on stock agencies?

I gave you one - Alamy can pay 60% commission and still fund a scientific research centre out of its profits.

Getty, apparently, is unsustainable if it pays more than 20% commission.

The difference is that one just wants to make money, the other is more interested in playing a social role.

« Reply #38 on: July 16, 2011, 19:39 »
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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.

Quote
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.

Quote
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.

Quote
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.

SNP

  • Canadian Photographer
« Reply #39 on: July 16, 2011, 19:49 »
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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.
« Last Edit: July 16, 2011, 19:52 by SNP »

« Reply #40 on: July 16, 2011, 19:55 »
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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.

SNP

  • Canadian Photographer
« Reply #41 on: July 16, 2011, 20:03 »
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^ that's probably true. but then you see successful contributors who are diamonds + uploading the same concepts they already have in their own portfolios....you can't exactly say that contributors should only produce truly original, never done before concepts. that's impossible. I certainly do my very best to make my images my own...but the concepts we all come up with have been done over and over again regardless of best efforts not to. and that's not including those people who blatantly rip off others

« Reply #42 on: July 16, 2011, 20:24 »
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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.  ;)

« Reply #43 on: July 16, 2011, 20:59 »
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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.  ;)

It is a little staggering to think about what their take must be even now with reduced sales.

I agree they could have completely crushed the competition with some savvy moves - like image exclusivity - at least before they started killing sales w/ drastic best match shifts.

SNP

  • Canadian Photographer
« Reply #44 on: July 16, 2011, 21:03 »
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I would prefer image exclusivity to artist exclusivity...

« Reply #45 on: July 16, 2011, 22:33 »
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Shank your following the script perfectly.

When is it when you get banned again ?

I think the RC credit bebarkle would be easiler to justify if the targets were somewhat achievable and some sought of an upside for non-exclusives.

I mean to get 1 million RC to retain 20%.

If they'd made it 18-23% for non-exclusives may have been more palatable

Shank_ali

    This user is banned.
« Reply #46 on: July 17, 2011, 00:12 »
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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 !

« Reply #47 on: July 17, 2011, 03:05 »
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I'm a business person, shank. Are you one? How many companies have you run?

Shank_ali

    This user is banned.
« Reply #48 on: July 17, 2011, 03:11 »
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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....

« Reply #49 on: July 17, 2011, 03:46 »
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You're the one who said "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". Now you are saying the only people with clarity and assurance are those who run microstock agencies.

And you're telling us that iStock's owners aren't qualified to run the business because they also own hotels in Dubai? Well, given their track record I might be incluined to agree. However, the general theory in business is that being successful in running one gives you the insight into how to run another. If you were at a high enough level, you would know that.


 

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