When “microstock” was born, it came about because of a frustration with the traditional stock houses and their tight membership. From free sharing between designers, a combination of pricing and sales increases brought the industry to a place where contributors could earn a living with some hard work. Now, photographers are experiencing the opposite with some agencies – case in point, a recent move by Fotolia that has many contributors declaring May 1 (today) as “D-Day”.
In the microstock licensing industry, there are basically two models – the “pay as you go” model, created by Bruce Livingstone at iStockphoto, and the subscription model, brought by Jon Oringer at Shutterstock. Both models have their pros and cons, for both buyers and contributors, and for the most part, buyers usually fall into one or the other group due to their image needs.
PAYG usually requires a lower up front “investment” where the buyer pays cash for the single or multiple images they need . Alternatively, they can buy “credits” which is a larger cost, and effectively ropes the buyer in to one location for a period of time in trade for a slight discount. Contributors are paid a royalty based on the net income from licensing an image – for example, a $10 license at Stocksy United nets any contributor $5 – a 50% royalty, which is generally seen as a fair trade for the work done by the agency. In contrast, iStockphoto these days will keep as much as %85 of the cost of a license. PAYG tends to be favored by contributors as the prices are higher and based on size (for Royalty Free licensing) and so royalties are higher.
A subscription model requires the buyer to pay a certain amount per month ($249), and for that amount, they get a certain number of image licenses per day, or through the month. This amount is much more than the casual buyer would spend in a month, so it is mostly large agencies and businesses using this model. With a subscription model, the contributor gets a set amount per download, and that amount is calculated based on the agencies predictions of how much the average buyer will download during a month. For example, at Shutterstock, a buyer can download 25 images a day, which is 750 a month. A contributor will get an average of $.33 or so, which would mean Shutterstock would pay out exactly what it takes in, making no profit. They know from history, though, how much a buyer actually downloads, and are able to know what numbers will let them profit. Contributors aren’t generally great fans of subscription models, since the return per download can be low, but the volume of sales has kept Shutterstock in the favored category.
Now, European agency Fotolia is combining the worst of both worlds and contributors are not happy about it ( note that I am not a contributor at Fotolia ). With their new site “Dollar Photo Club”, the investment from the buyer is tiny – only $10 a month. Images are licensed at largest size for just $1. Essentially, the buyer is just pre-paying for ridiculously low priced images. The royalty to the contributor is just $.25 – $.40 based on their sales at Fotolia, but unlike Shutterstock, there is no incentive to license a lot of images, so the volume to justify the low pricing isn’t there. This isn’t getting large buyers to make a large investment and use a lot of content. This is product dumping in an attempt to gain market share:
The goal is to make money from the outset: we’re incredibly aggressive on pricing
iStockphoto recently announced a new subscription program in an attempt to get customers from Shutterstock, going so far as to price their plan $50 cheaper for essentially the same content. Unlike Shutterstock, they only pay contributors $.28 per download for that collection. However, at least there is a chance the volume will be there with the monthly commitment. A number, which so far is unknown, due to their poor software infrastructure, and the ability to only calculate these numbers once, sometime during the next month after the sale.
Contributors aren’t happy about the dumping being done by Fotolia. They’ve declared today as “D-Day” for “Deactivation Day”, where hundreds of thousands of images are being removed from Fotolia, essentially, opting them out of the “Dollar Photo Club”. “D-Day” is a nod to the effort last year at iStockphoto after it was discovered that the company essentially gave away contributor content to Google for them to give away to users, in perpetuity. You can read more about the movement on Microstockgroup, where contributors who are more involved detail the issues: http://www.microstockgroup.com/index.php?topic=22487
Yes, there is an opt out button for contributors, but in typical corporate “we’ll do what we like” attitude, instead of creating an idea that is good for contributors and encouraging them to opt in, they come up with an awful idea, and require everyone to opt out. Unfortunately, many contributors aren’t as active as some, and will completely miss that Fotolia has sent the whole collection to be given away at DPC. That’s why some photographers are trying to rally the troops with the “Boycott Fotolia” initiative.
We have no choice but to say that as of May 1, 2014, Fotolia.com has failed to fully comply with any of the 2 items in the petition which was supported by 1165 people.
Right now it is your decision, and yours alone, as to what to do in the current situation.
So, if you’re a contributor and you’re interested in sending Fotolia a message, today is the day to remove your images from the agency, or at least opt out of “the club”. As a buyer, you can take this opportunity to license your work from an agency that values it’s contributors and pays a fair royalty rate. As I said, I don’t contribute at Fotolia, but I wish the other photographers good fortune in dealing with this.
