Royalty Change Follow up

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kkthompson
Member is a contributor and has less than 250 Photo downloadsMember is a contributor and has less than 250 Flash downloadsMember is a contributor and has less than 250 Illustration downloadsMember has been inducted into the iStockphoto Hall of Fame.
Posted Wed Sep 8, 2010 1:54PM
We knew when we made yesterday’s announcements that there would be a lot of feedback. Because we wanted to give everyone a chance to voice their opinions — constructive and otherwise — we’ve mostly kept quiet for the last 24 hours. That being said, every single post has been read and every single comment has been heard.

With this post we’re going to provide some clarification, answer some common questions and concerns, and hopefully start a back-and-forth dialog to help everyone understand exactly what’s happening and why.

First, it needs to be noted that while iStock is a part of Getty, we are still run independently. The announced changes were decisions — difficult decisions — made by iStock for the benefit of iStock and its community.

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.

Last year we proposed changes to canister levels designed to stave off, but ultimately not solve, this problem. In the end, we chose to scrap those. The royalty changes we released yesterday are not a band-aid solution, they are a permanent fix. They ensure a viable, long-term future for iStock and its community.

The move to annual levels also helps protect and reward the Exclusive contributors who work the hardest to upload high-quality content. We want to keep paying these people 40% royalties (and even 45% in some cases). But we can't pay everyone 40% and remain competitive, which is what our previous structure would have eventually amounted to, when taken to its logical conclusion.

There are hundreds of you out there for whom iStock is a full-time job. We take our responsibility to you seriously and this system was designed with you in mind.

According to our projections 76% of Exclusive contributors will either retain their current royalty rate or move up.

If you are looking at the credit number on your stats page thinking “He is crazy, I am clearly going down”, remember: historically HALF of our annual credit usage take place in the last four months of the year. If that holds true, most of you should see your current redeemed credit total approximately double by the end of the year.

Again, these are our projections based on months of number crunching. We are confident they are accurate, but if they prove to be wildly off the mark, we will revisit them.

None of this is comfort to the 24% of Exclusives who will see a rate decrease – or to any of the non-Exclusives who are, quite frankly, bearing the brunt of these changes.

But, we expect to see our total royalty payout increase by more than 30% next year, from $1.7-million per week to well over $2-million per week. Make no mistake, the total amount of money iStock contributors are making is going up.

We understand it’s a difficult change. We also understand how integral you all are to iStock’s success, both up to this point and going forward. As I said, these weren’t easy decisions to make, but I assure you that they had to be made and we’ve done everything to protect the future of the company and its contributors.

(Edited on 2010-09-08 13:59:53 by kkthompson)
rogermexico
Member is a contributor and has less than 250 Photo downloadsMember is a contributor and has less than 250 Flash downloadsMember is a contributor and has less than 250 Illustration downloadsThis member tied their last cage challenge. PityMember has won a contest
Posted Wed Sep 8, 2010 1:57PM
Here are some of the questions about the nuts and bolts that came up the most so far.

1. How often will the redeemed credit total update?

Right now it's a weekly update but we will make it daily.

2. The following points are hard to follow:

• Your minimum royalty rate will not decrease throughout the year. You are guaranteed this royalty rate for the entire year with the possibility to go up levels as you meet additional targets
• Redeemed credits do not pass from one year to another
• You will retain the royalty rate from the end of the previous year


So your royalty rate to start each year is based on the total redeemed credits you finished the previous year with.

Based on the current totals, an Exclusive photographer who finishes 2010 with 40,000 Redeemed Credits will begin 2010 with a royalty rate of 35%.

This is your guaranteed minimum rate for the entire year of 2011. It will not go down during that year.

On January 1 2011 your Redeemed Credit total will reset to zero and you will start accumulating them again as 2011 goes on.

In January 2011 we will post the upcoming Redeemed Credit totals for 2012.

Lets say that the person in our example has a good year and they endup actually reaching the 2012 target for 40%. Their royalty will immediately go up to 40%.

Then at the end of 2011 we will take your total Redeemed Credits, and apply them to the 2012 targets, for your new starting minimum royalty for the year.

The process then starts over again.

I hope that's a little clearer. I will update this post here with more answers for easier reading.


3. Vector targets

Vector targets are higher than photo targets strictly because the average Vector download uses more credits - roughly twice as much.

Because we're splitting out photo and illustration into separate targets, there are people who have portfolios split between both who are seeing reductions. This is a hard consequence of tracking the two separately that we knew would mean reductions for some people.

(Edited on 2010-09-08 14:26:54 by rogermexico)
lisathephotographer
Member is a Bronze contributor and has 250 - 2,499 Photo downloadsExclusive
Posted Wed Sep 8, 2010 1:57PM
No change here then!
Kngkyle2
Member is a Bronze contributor and has 250 - 2,499 Photo downloadsExclusive
Posted Wed Sep 8, 2010 1:58PM
/ /
According to our projections 76% of Exclusive contributors will either retain their current royalty rate or move up.





I'm one of those 76% but that doesn't mean I like the changes. I figure it will take me two to three times as long to advance to the next level as it would under the current canister system. And since you will continually raise the redeemed credits required each year I may never go up to the next level.




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.





I call bulls!@t on that one. You already pay less than every other microstock site and you're telling us you can't survive with that? How do all the other sites that pay their contributors 50%+ survive? It's not like they don't have their own canister type system where the more downloads you get the more you make.



Perhaps the worst thing for me is that I just went exclusive a month ago after being independent for over 2 years. Many of my colleagues warned me that I shouldn't put all my eggs in one basket and I went along with that for awhile but finally decided that Istock was going to always take care of their exclusives. Boy was I wrong. Greed has taken over iStock. I fear their is no going back with Getty calling the shots.

I feel like I've been stabbed in the back.

(Edited on 2010-09-09 02:32:38 by Kngkyle2)
kemie
Member is a Diamond contributor and has 25,000 - 199,999 Photo downloadsMember is a contributor and has less than 250 Flash downloadsMember is a Diamond contributor and has 25,000 - 199,999 Illustration downloadsExclusiveExclusive iStockphoto IllustratorMember has had a submission accepted to the Designer SpotlightMember has had a File Of The WeekStrictly for the hardcore, this badge is only worn by Wiki Warriors from Way Back When. The ones that just Wiki'd for fun, before it was all cool and popular. The Old School.Awarded to fabulous photographers with more than 100,000 downloads
Posted Wed Sep 8, 2010 1:58PM
Are the differences with vector levels going to be addressed?
benjikat
Member is a Silver contributor and has 1,250 - 4,999 Video downloadsMember has had a File Of The Week
Posted Wed Sep 8, 2010 1:58PM
Posted By kkthompson:
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.


It's a great pity that this paragraph was missing yesterday
CT757fan
Member is a Silver contributor and has 2,500 - 9,999 Photo downloadsExclusive
Posted Wed Sep 8, 2010 1:59PM
UNSAT.
graytown
Member is a Gold contributor and has 10,000 - 24,999 Photo downloadsMember is a contributor and has less than 250 Flash downloadsMember is a contributor and has less than 250 Illustration downloadsMember has had a submission accepted to the Designer Spotlight
Posted Wed Sep 8, 2010 2:00PM
At least it was acknowledged that non-exclusives are 2nd class citizens.
bmcent1
Member is a Diamond contributor and has 25,000 - 199,999 Photo downloadsMember is a contributor and has less than 250 Video downloads
Posted Wed Sep 8, 2010 2:00PM

Posted By kkthompson:

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.


ONLY IF YOU LOOK AT PROFITS AS A PERCENTAGE.

Additionally, your "problem with success" has a limit, at which you'll never take less than 60% of royalties under the current setup. That hardly seems like something that's going to take down a hugely successful company.

Continue growing the market. Continue increasing your REAL profits, and please don't take money out of a contributors pocket to meet a percentage when your actual profits can continue to rise without limit as long as you keep growing the market.
AdShooter
Member is a Diamond contributor and has 25,000 - 199,999 Photo downloadsExclusive
Posted Wed Sep 8, 2010 2:00PM
So basically you listened to everything that was said and then changed nothing?  No compromise at all...
rswift
Member is a Bronze contributor and has 250 - 2,499 Photo downloadsMember is a contributor and has less than 250 Flash downloadsMember is a contributor and has less than 250 Illustration downloads
Posted Wed Sep 8, 2010 2:01PM
I'm struggling to understand how a percentage can vary as income increases?
ArtisticCaptures
Member is a Diamond contributor and has 25,000 - 199,999 Photo downloadsExclusive
Posted Wed Sep 8, 2010 2:01PM
Why the huge cut in our Vetta royalties - especially when it's been "such a great success" and you're raising the prices?
PeterPolak
Member is a Bronze contributor and has 250 - 2,499 Photo downloads
Posted Wed Sep 8, 2010 2:01PM
Is this all? It took you 24 hours to come up with this??? Seriously, any marketing school student could write something like this for you, guys. This is not an answer to 132-page forum thread, this is a joke.
Imgorthand
Member is a Gold contributor and has 10,000 - 24,999 Photo downloadsExclusive
Posted Wed Sep 8, 2010 2:02PM
I can't belive it
pearley
Member is a Bronze contributor and has 250 - 2,499 Photo downloadsMember is a contributor and has less than 125 Audio downloadsMember is a Silver contributor and has 2,500 - 9,999 Illustration downloadsExclusiveExclusive iStockphoto Illustrator
Posted Wed Sep 8, 2010 2:02PM
This addresses nothing to those, like myself, who have trusted the system to be fair. Not all of us use iStockphoto as a full-time job, yet we accepted the terms that we would eventually reach higher royalties—just in a slower fashion. It's understood that the system was unsustainable in it's current state, but to scrap the whole idea and force those who have worked with you to develop a profitable solution to change with the new terms without even opening a dialog is asisnine. If it's understood how integral we all are to iStock, then why wasn't our voice considered at all? Because at the end of the day, we are all dollar signs, and the easiest variable to squeeze and force to adapt. This is a horrible business move, and I can guarantee that most exclusives will drop their crown because of this. 1.4 million downloads a year is unsustainable, even for Yuri, Sjlocke, Duncan1980, or Lisegagne.

Is there anything in place for the event that your projections fail? You're not holding only your contributors on the line, but your customers and shareholders alike.

ETA: That being said, I'll be preparing to ship my portfolio off to other competitors. No point in swimming with sharks if the risk gives you unfair odds to begin with, if the rest of you want to play a game you have no chance at winning, good luck.

(Edited on 2010-09-08 14:07:33 by pearley)
michaelmjc
Member is a Gold contributor and has 10,000 - 24,999 Photo downloadsExclusiveMember has had a submission accepted to the Designer SpotlightThis member has lost their last cage match. Consider this the black eye the bully gave you after school by the bike racks.
Posted Wed Sep 8, 2010 2:02PM
Wow, what a crappy response. I can see you definitely put 24 hours worth of time into this. I'm removing my exclusivity and uploading to other sites now. Stupid, stupid move.

Fail.

(Edited on 2010-09-08 14:03:57 by michaelmjc)
Chris3fer
Member is a Gold contributor and has 10,000 - 24,999 Illustration downloadsExclusive iStockphoto IllustratorMember has had a File Of The Week.
Posted Wed Sep 8, 2010 2:02PM
Why don't you just say "We do what we want, now give me your lunch money!"?
Alina555
Member is a Diamond contributor and has 25,000 - 199,999 Photo downloadsMember is a Bronze contributor and has 125 - 1,249 Audio downloadsMember is a Bronze contributor and has 250 - 2,499 Illustration downloadsExclusiveExclusive iStockphoto IllustratorExclusive iStockphoto Audio ArtistMember has had a File Of The Week.
Posted Wed Sep 8, 2010 2:03PM
so pretty much, nothing new ....
Chris3fer
Member is a Gold contributor and has 10,000 - 24,999 Illustration downloadsExclusive iStockphoto IllustratorMember has had a File Of The Week.
Posted Wed Sep 8, 2010 2:03PM
Huge FAIL.
RedBarnStudio
Member is a Diamond contributor and has 25,000 - 199,999 Photo downloadsMember is a contributor and has less than 250 Flash downloadsMember is a contributor and has less than 250 Illustration downloadsExclusiveMember has had a File Of The Week
Posted Wed Sep 8, 2010 2:03PM
Bullshit
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