Shutterstock has provided investors with some very interesting information about their Enterprise pricing strategy and how it differs from their normal E-commerce pricing. You can find the �E-commerce vs. Enterprise Case Study� by going go to:  http://investor.shutterstock.com/phoenix.zhtml?c=251362&p=irol-presentations. Then open the pdf under �Investor Presentation� that was uploaded on 11/18/15. The chart explaining the Case Study is on page 25 of this 37 page pdf.

The chart raises a number of questions for contributors. It seems to indicate that only 1 in every 12 Enterprise downloads are Paid while 11 out of every 12 are Free, Unpaid for comp use only. It is unclear whether contributors of the comp images are compensated in any way for this use.

The chart also seems to indicate that the average price of an Enterprise paid download is $100. If this is true, then a significant percent of the paid images must come from the Offset and Premier collections for the average price to be so high. (Premier is a collection of images that can only be seen by customers that have negotiated an Enterprise deal. The images included in this collection are believed to come primarily from traditional RF stock suppliers.)

So the Questions:

1 � Do contributors receive any type of compensation when their image is only used for comp purposed?

(If they don�t, could that partially explain why many contributors are seeing a significant decline in sales? More and more of Shutterstock�s customers are getting the images they need through Enterprise deals. They may be downloading the same number of images they have always downloaded, they just aren�t paying anything for most of the downloads.)

2 � Do the downloads Shutterstock reports at the end of each quarter include the Unpaid ones as well as the Paid, or are they just reporting Paid downloads?

3 � How are the prices calculated for each paid image from the regular Shutterstock collection?

4 - Is a customer�s total number of paid downloads each month divided into that customer�s gross negotiated fee for the month and that price assigned to every image downloaded regardless of whether the image came from the main collection, Premier or Offset?

(One would think this would be unfair to the Offset and Premier contributors whose images are supposed to be licensed at higher prices. From what I hear from Offset contributors, most of their sales are at the listed $500 for a 300 dpi image and $250 for a 72 dpi image. The prices are seldom discounted.)

5 � Is an Enterprise customer simply billed at the end of each month for the number of images actually used from each collection at a stipulated price for each collection?

(If this is the case then the customer�s monthly charges might vary widely month to month.)

6 � If 5 is the case, what is the price charged for a download from Shutterstock�s standard collection? Is it IOD prices of $10 to $15, or what?

(If there is a base collection price, an Offset price and a Premier price then a huge percentage of the Paid Downloads must be from the higher priced collections in order for the average �Revenue per Download� to be $100.)

7 � Since the customer gets �unlimited impressions� from every image downloaded, is every image from the main collection licensed at an �Enhanced License� price of between $68 and $100?

(If that is the case it might explain the $100 average download for all Enterprise sales, but I would think many Enterprise customers might need a lot of images at lesser prices than that.
Do the royalties contributors receive for Enterprise sales consistently reflect prices this high?)

8 � Is a customer�s monthly subscription fee based on a fixed number of images downloaded regardless of collection?

(This seems unlikely because Shutterstock�s profit per image could vary widely depending on how many images the customer happened to choose from each collection. If all the images downloaded by a given customer were from the Offset and Premier collections, and Shutterstock paid the regular royalties for each of these uses, Shutterstock might have a significant profit loss for this customer. If, on the other hand, the customer only used images from the base collection, and Shutterstock had negotiated a high enough overall price, the company�s  profits could be huge. But, to give the customer unlimited choice at the widely varying price points would seem to be risky.)

What do you think?

*Sigh*

All of our work is available through Premier. The high prices those buyers pay through their special large-enterprise portal is what gives us our large SODs, up to $120 or more. We are not compensated for free comps, which are used for presentation purposes to convince clients to license an image. They're only available to certain large customers and have been for a while now.

This is all old news. The only thing new is the ratio of free comps to paid images, which is higher than I expected but not earth-shattering.

Getty has been providing the same service to large enterprises forever.

This is all old news. The only thing new is the ratio of free comps to paid images, which is higher than I expected but not earth-shattering.

Exactly.

*Sigh*

All of our work is available through Premier. The high prices those buyers pay through their special large-enterprise portal is what gives us our large SODs, up to $120 or more. We are not compensated for free comps, which are used for presentation purposes to convince clients to license an image. They're only available to certain large customers and have been for a while now.

This is all old news. The only thing new is the ratio of free comps to paid images, which is higher than I expected but not earth-shattering.

Getty has been providing the same service to large enterprises forever.

Thank you for explaining this Shelma.  I thought it was another bit of disastrous news.  If this is where my high $ sales is coming from then fine.  Volume was down Nov. but big sale on the 30th helped.

Quote from: Shelma1 on December 03, 2015, 11:20

*Sigh*

All of our work is available through Premier. The high prices those buyers pay through their special large-enterprise portal is what gives us our large SODs, up to $120 or more. We are not compensated for free comps, which are used for presentation purposes to convince clients to license an image. They're only available to certain large customers and have been for a while now.

This is all old news. The only thing new is the ratio of free comps to paid images, which is higher than I expected but not earth-shattering.

Getty has been providing the same service to large enterprises forever.

Thank you for explaining this Shelma.  I thought it was another bit of disastrous news.  If this is where my high $ sales is coming from then fine.  Volume was down Nov. but big sale on the 30th helped.

I just got a nice one too. What I found interesting in the chart was how much more revenue we and SS get from a sale to large enterprises despite the free comps. Much more money.

Question for Jo Ann Snover:

If we �assume that one of the ways a new file gains a good search position is sales� then I guess we would assume that every time an images is downloaded and the number of times would affect the position in the search return order. If we go back before there was much Enterprise, but there was IOD, I would guess that IOD files would get a higher rank because there was more confidence that a customer paying that money really intended to use the image, not just download it for a comp.

Moving forward to today, they still have all the data on the images downloaded, even if they are not being paid for those downloads and they can separate them out from all those other images that no one every downloads even for comp purposes. They also have some additional data because now they know which images a customer is actually using and they can give them a higher position in the search return order along with the IOD images and maybe even higher.
The comp use images are lower in the order and still above the ones that are never downloaded.

Of course, with the huge volume of images on all subjects now available in the collection, if an image doesn�t get quickly downloaded when it is first shown as a �new� image it will probably be buried so deep in the search-return-order that it will never be seen again.

And for the Enterprise customers, these images in the main Shutterstock collection are now competing against two much smaller collections � Offset and Premier.

My question is, now that Shutterstock has the extra advantage of knowing which images are actually being used, are there so many �used� images at the top of the search-return-order that must customers never get a chance to see the �comp used� images or any of the other images in the collection?