don't forget,
it's already second cut for independents.

They cut prices for L, XL not that long ago.

Yes,
I'm not removing my content from the for now.

But it's just making less sense give hem new content.
May be I'll submit there rejects from other sites.

Interesting ..
http://www.observer.com/2010/real-estate/mack-daddy-likes-big-bucks-and-klein-cant-not-buy

sorry if link is already posted 

Interesting ..

CEO of large company has expensive house shock.

I've been this mulling over trying to work out what the longer term effect of all this might be on Istock and their bottom-line.

Personally I am going to be dropping from 20% down to 18% __ that's a 10% hit for me. However Istock themselves are going from 80% to 82% of my sales and that's only a 2.5% increase for them (barely noticeable you might think).

Although many smaller-selling contributors are taking bigger hits than me there are also a great many heavy sellers who will not be hit at all __ and so again the overall increase in Istock's revenue is still going to be comparatively small.

Yes, Istock will be helping themselves to a bigger chunk of Vetta sales and also exclusive EL sales too, but even so the contributions from those will be fairly small compared to overall sales.

My guess is that Istock's overall gain will probably be no more than a 3-4% increase in total revenue. Ok, because the overhead has already been paid for then the net profit figures should be much more impressive __ but at what cost?

Istock would only need to lose 3-4 buyers out of every hundred they currently have and the whole debacle becomes financially neutral as far as the overall profit goes. When you then cost in the truly massive loss of goodwill from both their customers and their contributors, the potential number of exclusives ditching their crowns and the huge boost to competing agencies .... is it ever really going to be financially worth it?

It seems to me that Istock are taking a gamble of truly staggering proportions with fairly minor potential gains to their bottom-line ... and a mind-numbingly large downside if it all goes pear-shaped.

Is editorial one of their new content streams?  (Mostly sports editorial in this case?) 

This announcement was made on Wed 8th (the day after the Istock announcement).

http://www.businesswire.com/news/home/20100908005304/en

Paul Melcher's take here:   http://blog.melchersystem.com/2010/09/12/under-the-carpet/

Melcher's closing words ring so true This is not about fair competition anymore, where the best image wins, this is becoming a real monopoly. Heard that, Justice department ?

Is editorial one of their new content streams?  (Mostly sports editorial in this case?) 

This announcement was made on Wed 8th (the day after the Istock announcement).

http://www.businesswire.com/news/home/20100908005304/en

Paul Melcher's take here:   http://blog.melchersystem.com/2010/09/12/under-the-carpet/

Melcher's closing words ring so true This is not about fair competition anymore, where the best image wins, this is becoming a real monopoly. Heard that, Justice department ?

I don't know if it's part of this or not but in July Examiner.com announced that their writers would be able to use Getty images for free in their articles.

I've been this mulling over trying to work out what the longer term effect of all this might be on Istock and their bottom-line.

Personally I am going to be dropping from 20% down to 18% __ that's a 10% hit for me. However Istock themselves are going from 80% to 82% of my sales and that's only a 2.5% increase for them (barely noticeable you might think).

Although many smaller-selling contributors are taking bigger hits than me there are also a great many heavy sellers who will not be hit at all __ and so again the overall increase in Istock's revenue is still going to be comparatively small.

Yes, Istock will be helping themselves to a bigger chunk of Vetta sales and also exclusive EL sales too, but even so the contributions from those will be fairly small compared to overall sales.

My guess is that Istock's overall gain will probably be no more than a 3-4% increase in total revenue. Ok, because the overhead has already been paid for then the net profit figures should be much more impressive __ but at what cost?

Istock would only need to lose 3-4 buyers out of every hundred they currently have and the whole debacle becomes financially neutral as far as the overall profit goes. When you then cost in the truly massive loss of goodwill from both their customers and their contributors, the potential number of exclusives ditching their crowns and the huge boost to competing agencies .... is it ever really going to be financially worth it?

It seems to me that Istock are taking a gamble of truly staggering proportions with fairly minor potential gains to their bottom-line ... and a mind-numbingly large downside if it all goes pear-shaped.

I believe the impact on contributor's current commission percentage is just part of their goal. The other part is really spoken out clearly in their "not sustainable" message: They don't want more contributors (current exclusive bronze / silver / gold contributors) to increase their share in the future.
Without these changes many of these would have climbed up the ranks (and increased their commission). Slowly but surely.
Now they have the tools (yearly fixing of the necessary performance numbers) to make sure that does not happen. That is the part of their storyline where they actually are telling the truth - they want to change from a system where (exclusive) commissions rise simply by time passing by to a system that keeps them down.

iStockphotos �Unsustainable� Business Model: From Crowd-Sourcing To Crowd-Shafting?

Good article, shame about the completely uninformed comments underneath it *sigh*

My guess is that Istock's overall gain will probably be no more than a 3-4% increase in total revenue. Ok, because the overhead has already been paid for then the net profit figures should be much more impressive __ but at what cost?

Istock would only need to lose 3-4 buyers out of every hundred they currently have and the whole debacle becomes financially neutral as far as the overall profit goes. When you then cost in the truly massive loss of goodwill from both their customers and their contributors, the potential number of exclusives ditching their crowns and the huge boost to competing agencies .... is it ever really going to be financially worth it?

It seems to me that Istock are taking a gamble of truly staggering proportions with fairly minor potential gains to their bottom-line ... and a mind-numbingly large downside if it all goes pear-shaped.

Yes, I hit on the same idea in the "leveraged" thread:

"As iStock is only making maybe 3% extra overall from screwing us, it will take 33 x $30,000 of sales before they recover the money from the price hikes that this loss has cost them. That is  $990,000 of sales.

It also follows that if just 3% of buyers withdraw their business, the entire benefit to Getty of this crazy pay cut will be completely wiped out."

Of course, the 3% assumes that each departing buyer spends the average amount.

Another point is that because there are no costs associated with this change, all the extra cash goes directly into the bottom line. Conversely, all losses from buyers come straight out of the bottom line, because there are no savings associated with the disappearance of a buyer.

If we assume that 30% of the turnover is profit, then taking an extra 3% from us will boost profits by 10%. Losing 3% of (average spend) buyers would neutralize that. BUT  every extra additional one percent of buyers who quit would cut the profits by3.3%

The tighter their profit margins are, the bigger the hit caused by each one percent of buyers, and vice-versa.

Another point is that you can never replace a lost buyer. You can work to bring in another buyer, but you are always trying to recruit buyers, so the one you gain is one you would have had anyway. The only thing you can do to repair the damage caused by losing a buyer is to sweet-talk that buyer into coming back.

On the same lines, giving up exclusivity benefits the bottom line unless the person doing it also transfers sales elsewhere. Non-exclusives pulling pictures is unlikely to have much impact on the profits as buyers will generally find a similar image to meet their needs.

 

Quote from: Microbius on September 13, 2010, 06:16

Quote from: alias on September 13, 2010, 03:18

iStockphotos �Unsustainable� Business Model: From Crowd-Sourcing To Crowd-Shafting?

Good article, shame about the completely uninformed comments underneath it *sigh*

Lots of anger from the "trads." By the way, when I say trads, I use it as an abbreviation, not so many letters to type, NOT as a derogatory term, as one gentleman wrote. It just really cracks me up how they wish all micros would go away and they say we all got what we deserved. Do they seriously think companies are going to be able to afford $100 stock photos nowadays? There's a reason Walmart is huge and the same reason microstocks are huge, it's called demand.

By the way, Getty's new business model reminds me alot of Sam Walton's. He has the same basic principle...pay suppliers nothing. They will be clamoring to do business with me because I am the biggest.

Well although Im doing extremly well with Trad/RM, etc,  Ive got no sympathy for them at all,  theyve been copyrighting sunsets and clouds for jonks now and have had a real good time. So they blame the Micros for decreasing business and all, calling us idiots and everything, right?
Only today about 75% of all Trad-photographers I bet supply MIcros as well.

By the way, Getty's new business model reminds me alot of Sam Walton's. He has the same basic principle...pay suppliers nothing. They will be clamoring to do business with me because I am the biggest.

I was totally thinking the same thing!  The only difference is that Walmart often does have the lowest price, whereas Getty and iStock do not.

I spent a good portion of the weekend going over my position at iStock wrt exclusiveness and where these changes will put me.  I'm only a few months away from 40% (diamond status) but the changes will drop me from 35% down to 25%.  If I go independent not only will my earnings drop even more, but so will iStock's - at least what the earn off me.  I won't pull my portfolio from iStock if I go independent.  Granted, I'm just a small drop in the bucket for them - but dropping exclusivity also drops the prices on all my images - including the 5 or so that made it into the much-hyped Vetta collection.   That means less money for them off the top as well.  

Has anyone else considered the other cuts we've suffered beyond this royalty cut?

I thought about it and I realized that this royalty cut will actually hurt me a lot less than other things they've done.  I'm an independent and back in October of '08 when they changed the best match it cut my income by nearly 50% (on a portfolio of about 500 images). 

After a year of hard work and more than doubling my portfolio I had recovered those losses and was starting to get BMEs again for the first half of this year.  But then I guess they made changes again and since June my income is down 30%-40% again.  This royalty cut is peanuts compared to that.

Obviously IS doesn't really want my photos even though I've made thousands of dollars for them.  Seems like a ridiculous way to run a business.  Regardless, I know where I'm not wanted.

I don't know if it's part of this or not but in July Examiner.com announced that their writers would be able to use Getty images for free in their articles.

Link for you if interested. I'd guess that examiner is paying for the right to use these "free" photos with some limitations. They used to offer free AP photos. We can also read this to be news photos. IS doesn't have editorial and news photos. I wish they did. Probably that Getty doesn't want to kill their expensive content and licensing by offer Micro News, but they don't mind killing RF?

http://bicyclewriter.com/47/examiner-moves-from-ap-to-getty-images