Explanation of the issue was just posted here:
http://blog.pixmac.com/2274/explanation-of-technical-error/

Thank you everyone for the patience.

Vita

Here is the explanation.

We had discovered a technical error in tracking transactions in our internal system that affected one of our suppliers. Out of 9.753 transactions during 14 months there were 58 transactions not reported to the supplier. Total value of  transactions is $283.60. We will send that amount to the supplier.

We will include information about what photographers should be paid with details about image IDs, credits and size. The error technically happened when our customer purchased a previously downloaded image. Only single image purchase was affected. Downloads by customers using prepaid credits were not affected by this error.

The error also caused transactions that reported downloads in the suppliers�s system but were not sold to an end-user in total value of $600.30. Pixmac have already paid these extra costs while not charging customers.

The error was fixed immediately after its discovery and we have carefully checked the transaction history again during last several days. We are sorry for the error. We assure you, that we will do anything technically possible to avoid such issues. Mainly by adding several cross controlling mechanisms that would notify us in case there is any difference in the communication between Pixmac and the supplier�s API.

On a general note � internal system of Pixmac is a complex solution. There are currencies, credit pack discounts, refunds, bonuses, individual discounts, price changes, affiliates etc. There are many controlling mechanisms already. Pixmac website and its backend is changing constantly. Same as all the other agencies sites are under development. We are open to discuss any improvements and we are flexible to answer any questions anytime.

It is not our interest to do anything against contributors or suppliers. That is not a scenario working long term. We know that. We are trying to build a fair company although we make mistakes.

If you are interested more in our philosophy, we recommend you to read recent MicrostockGroup article: Major Press Release from Pixmac � Fairness in Front and also The Idea of an Open Company.

If there are any further questions on this matter we would like to answer any of those by email at [email protected] and phone +420 296 566 268 (9-17 CET).

According to DT, high rez images were cached on your system and sold directly from your site and that is NOT how the whole API partner program was supposed to work. You don't address anything about that.

According to DT, high rez images were cached on your system and sold directly from your site and that is NOT how the whole API partner program was supposed to work. You don't address anything about that.

'The error technically happened when our customer purchased a previously downloaded image.'

To avoid technical problems such as broken download, bad connection, non-responsive servers and other technical issues the caching system allows to store the purchased files for a limited time for the buyers. Without the need to pay twice for the files while the customer is the same. Although it is an added value for the customer it is a thread for the contributor.

Quote from: cclapper on January 24, 2011, 09:57

According to DT, high rez images were cached on your system and sold directly from your site and that is NOT how the whole API partner program was supposed to work. You don't address anything about that.

'The error technically happened when our customer purchased a previously downloaded image.'

To avoid technical problems such as broken download, bad connection, non-responsive servers and other technical issues the caching system allows to store the purchased files for a limited time for the buyers. Without the need to pay twice for the files while the customer is the same. Although it is an added value for the customer it is a thread for the contributor.

That isn't how I was told it would happen. I was told that when a client finds my image on your site, they click on the image and the thumb takes them directly to my port on DT (or whatever partner) where the client purchases the image. That's not at all how it is happening. You have circumvented that whole process by making your site become an actual site in competition with the other sites, rather than just being a partner site.

Here's the quote from DT:

   

As you all know, Dreamstime sells content using a large distribution network, additional to our own site.  From time to time, we audit our distribution partners to ensure that everything is going as it should.

Earlier last week, we have decided to remove the access to one of our distributors for a serious infringement of the terms of our contract with that distributor.  More specifically, we discovered that the distributor has been selling some images at a higher price point than agreed with Dreamstime, with the extra amount not being reported by the distributor.  The added amount per image varied from a few percentage points up to several times the acceptable price.  Furthermore, some of the files were duplicated and used, via a caching system, to allow future downloads from new and previous customers, without any payments sent to Dreamstime or its photographers.  Dreamstime considers this to be a serious violation of its contributor�s rights � one which we intend to see remedied by any and all available means.

We have consequently removed their access to all Dreamstime images, and we�re currently preparing a legal action towards this company.  I will not name the company here, due to the nature of the legal process.  Once this process ends, and we recover any royalties due, we will add any additional missing royalties due.

We are making this post to publicly advise our distributors and contributors that we will not tolerate any kind of infringements.  Similarly, we will not quietly end an infringement, endorsing suspected instances of fraud this way.  Strong ethics must prevail and should be the very first thing one analyzes before joining a partnership, no matter its type.

We will keep you posted.

I have bolded the relevant words, which seem to indicate more than a one or two time infringement. I can't imagine that DT is preparing legal action based on you just allowing a client to re-download an image they have already paid for, once or twice. And the fact is, it shouldn't be happening at all, because I was under the impression that you only got thumbnails, no high rez images. I was told they were all stored on DT (or wherever). So the high rez images should be in DTs caching system, not yours.

Zager,
This would all have more validity coming from Dreamstime.  If you have this settled, why not have Serban post a retraction?

Thanks for explaining all that technically, FD. That's exactly how I understood it all to be working.

Interesting, zager, how you�ve come in here and blamed it on a �technical error� to desperately try to maintain Pixmac�s innocence yet you�ve refused to respond to what exactly you�ve been accused of doing.

You�ve completely swept under the rug and justified the issue about caching, by saying that you do it temporarily �to avoid technical problems� for the buyer but the fact of the matter is that you had no right to store our files in your system and sell them directly and you know it!  You�re in the microstock business.  You can�t really play dumb and act as if you didn�t know that because if you didn�t, then you�re in the wrong business.  Furthermore, you�ve completely ignored the part about you selling the images directly at a price several times over the amount that was agreed to by Dreamstime.  Was that a system error too?

To top things off you�ve tried to brush the whole thing off by claiming that Pixmac just made a little mistake and we should all forgive you and sign up with you.   I suppose you can say that violating the terms between you and your supplier and breaking copyright laws by selling contributor images without their permission would be considered a mistake.  HUGE mistake! 

To make matters worse, after all of this Pixmac then tried to recruit us via email to upload to their site directly.  Pixmac couldn�t be more sleezy!

It�s amazing how Pixmac flushed their reputation and probably their company down the gurgler over a few lousy hundred bucks.

I hope other third parties learn from your teeny weeny �mistake�.

After following this topic, and other common writings about using re-sellers in Microstock, the following questions have raised in my mind:

Why don't we find the use of re-sellers good thing, in common? It however offers us possibility to get our images pushed harder, and it is well proven procedure in image industry.

Why the re-sellers are often not allowed to tell/show who are their partners? Is it because the various agencies do not want to tell the photographers there is someone else also creating sales - perhaps good sales? As far as I know, the re-sellers really are forbidden to show the name of the image supplier/agency. Agencies like Alamy, Corbis etc always show who are their re-sellers, and their re-sellers are openly allowed to show who they are representing. Microstock could/should learn from this habit.

Why are the agencies not showing in their sales reports the origins of the sales = the name of the re-seller - is that again because they do not want to tell the photographers there is someone else than themselves creating the sales?

Why are the agencies stating the top price the re-seller must use? Is it because they are afraid of our images could be sold with higher prices than what they use themselves? Nice way to prevent the photographers to get more money.

Why are the agencies stating/agreeing the share of photographers commission in some dollar amount only, instead of clearly showing the gross sales prices received and our agreed x% of that? When using re-sellers this gross sales price naturally should/would be the gross price the agency received from the re-seller (>original gross sales price > minus re-seller commission > net price reported to agency > in photographer's report > net price minus agreed commission %). If no re-seller is used, this system would still always leave us the certain agreed % - and not make it possible for the agency  to reduce the sales prices but still keep as much or almost as much money as earlier - and the only one suffering is the photographer

Why do we feel re-sellers could not sell images with higher prices than the original supplier? Wouldn't it only be good for us - providing we get higher fee ourselves, too.

Why do we attack the re-sellers about problems in reporting or showing the origin of images - we can do it, but at the same time we should demand information about the terms that the origins have stated to the re-sellers - from the origins. These suppliers might have their "fingers" in it anyway and the re-seller is not to be blamed about everything.

About this particular case and topic: when serious accusations like this are made, I trust the one that made this accusation in the beginning will come in public again, and tell about the result of real audit that has been conducted (?). At the same time, the other part in this case must be allowed to give their statement. The decent way to handle this case would have been to first make the audit, see the results - and only then make it public.

This is how I would see fair Microsoft world.

I tried to explain the elephant here:
http://blog.pixmac.com/2394/explanation-of-single-purchase/ [nofollow]

Thank you daffodil.
This might help:
http://blog.microstockgroup.com/major-press-release-from-pixmac-fairness-in-front/ [nofollow]

So it looks like this  "other company" first wanted you to represent them but after you started to grow bigger and more "dangerous" competitor in form of getting more images and more photographers of your own, they did not like that and terminated the contract. I must say this is exactly what should change in Microstock; "traditional" agencies do not have so many photographers of their own anymore but they too represent freelancers, and yet they are willing to have re-sellers, even in same market area as they have their own selling offices, and at the same time the re-sellers can naturally build their own business and represent photographers freely. Someone here said it is "sleezy" to invite photographers attend directly; I see nothing sleezy in that, every company, including I as a photographer, must have freedom to develop the business without any competitor or business partner trying to prevent that.

Quote from: daffodil on February 07, 2011, 03:43

So it looks like this  "other company" first wanted you to represent them but after you started to grow bigger and more "dangerous" competitor in form of getting more images and more photographers of your own, they did not like that and terminated the contract. I must say this is exactly what should change in Microstock; "traditional" agencies do not have so many photographers of their own anymore but they too represent freelancers, and yet they are willing to have re-sellers, even in same market area as they have their own selling offices, and at the same time the re-sellers can naturally build their own business and represent photographers freely. Someone here said it is "sleezy" to invite photographers attend directly; I see nothing sleezy in that, every company, including I as a photographer, must have freedom to develop the business without any competitor or business partner trying to prevent that.

Oh really? <sigh>

I can't help noting that 'daffodil' has only just joined MSG, has felt the need to respond only to this topic and both of their posts read like a press release from Pixmac themselves. Funny that.

Exactly.