"We want a word with Contributor Relations" Photo © Jeremy Nicholl 2004. All Rights Reserved.

Relations between photo agencies and contributors can be a tricky matter, especially when it comes to royalty percentages. When the agency is a microstock distributor with a crowd-sourcing base it doesn’t take many false steps to turn that cuddly community into a howling mob. And when those steps come from a Chief Operating Officer whose PR skills elicit comparisons with Tony Hayward and Gerald Ratner the results can be, well, explosive.

On September 7th iStockphoto COO Kelly Thompson lit the fuse to an impressive firestorm with his announcement on the agency’s forums titled “Important!: Royalty Changes and iStock Collections”. To the uninitiated iStock’s payment structure can appear confusing, to put it mildly, and Thompson’s announcement lacked clarity. But the iStockers themselves had no doubt: this was a pay cut, and a savage one, wrapped in vague and soothing language. Under the new rules contributor royalties would be as low as 15%.

After a few minutes bemusement the red mist descended and the brickbats started to fly. As the crowd swelled and searched for a target they settled on the obvious ones: Getty Images, who bought iStock in 2006, and Hellman & Friedman, the private equity firm that in turn acquired Getty in 2008. Although many iStockers had welcomed the 2006 deal with whoops and the belief that they were now headed for the big-time, the union has not always been entirely happy. Presented with a pay cut it was easy for the iStockers to conclude this was all the doing of Getty and the bankers: their community had been corrupted by the corporates.

As the fury grew the COO and iStock admins tried to field increasingly angry posts, but were soon forced to retreat; Thompson himself disappeared from view shortly after warning against personal attacks and “intonations of violence”. 132 pages and 2,633 largely abusive replies later the thread was locked and Thompson was back for a second attempt. This time he was better prepared, with performance facts and figures to support the reasoning behind the changes.

But word was out and the mob was waiting with pitchforks sharpened. They immediately seized on his statement that the changes were not Getty-inspired to mean this was a home-grown betrayal rather than one imposed from outside. In the eyes of many Thompson was instantly elevated from fall guy forced to do Getty’s dirty work to Public Enemy No. 1.

And his central justification – that the company’s business model was unsustainable – led to much analysis of company income and expenditure versus royalty payments, followed by speculation as to the veracity of previous claims of success in relation to the new claim of unsustainability:

iStock to contributors, 01/04/2008:
“That our revenue and payouts have eclipsed those of many traditional stock photography companies confirms that microstock is a viable and profitable business model for contributors and clients.”

iStock to contributors, 08/09/2010:
“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. As a business model, it’s simply unsustainable.”

For those watching from a safe distance it was Thompson’s claim of unsustainability that was by far the most interesting. Ever since microstock’s appearance the prime charge laid by traditional stock photographers has been that the business model is unsustainable. Unsurprisingly their stress has been on its unsustainability for the photographer accepting a low royalty percentage on a product with a tiny price.

But Thompson was saying much more than that: he was claiming that the current microstock model is unsustainable for the distributor, not just the contributor. If true – iStock’s contributors have been vociferously contesting it – there are obvious implications for iStock’s rivals, all of whom pay higher contributor royalties.

Versions of the recent history of the stock photo industry depend very much on who’s speaking. Ask a microstock contributor and you hear a tale of David vs Goliath, and how microstock pioneers swept aside an elite and greedy stock establishment. For professionals, on the other hand, it’s largely a story of amateurs enabled by digital technology producing inferior imagery, and wrecking the market by selling at giveaway prices. In fact one pro photographer ventured into the iStock fray to make that very point:

“All of you have been so happy to undercut traditional stock photography, copying the best selling images, shooting every hamburger you ever ate, and now that the traditional photographers (often derided as ‘trads’ by you) have come in to beat you at your own game, you’re shocked- yes, shocked!- to find out that this is a business, not a little happy family giving each other muffins and logrolling in the forums. Well, welcome to the real world- the one that you made for yourselves. 145 pages of whining and wanting things to go back to the way they were- it’s so pitiful. Face it. You aren’t going anywhere. You are going to stay here, and do what the man says. You are getting the bed you made yourselves, so go lie in it. Or go back to what you do best- arguing over the color of your little ribbons.”

That thread roared on for a further 167 pages & 3,336 posts before being locked, with iStock’s leaders largely conspicuous by their absence, despite numerous requests for Thompson to step outside and engage with his public.

On Friday the beleaguered COO emerged for his third attempt in as many days, but with a very different tack. “Where Do We Go From Here?” was not so much forum post as soliloquy, as he reminisced on 6 years at iStock, mused on the agonies of leadership, and – without a hint of irony – reminded the audience that it’s really not all about the money.

This last was a chronic misjudgment: the iStockers were looking for negotiations, not a lecture on moral values. If anything the response was even more bitter than before: one member pointed out that the money he made from iStock was intended for his wife’s breast cancer treatment.

For all the pyrotechnics at the iStock forums it’s questionable how many contributors will actually leave. It’s in the nature of these things that most of the noise is coming from a minority of contributors; it’s impossible to know if the rest are simply resigned to the new deal, or are quietly occupied deleting their files. Indeed many may not even know of the change in royalties. Reportedly iStock did not mail the information to contributors, but simply posted the news on the agency forums; so only those active on the forums would be aware of the issue. Anyhow, if Thompson’s analysis is correct iStock’s microstock rivals will also have to adjust their royalties downward at some point.

Nonetheless some contributors have already been approached by rival microstock outfits, and at least one non-microstock agency has made a very public intervention. As the iStock row took hold Alamy posted gloatingly on twitter: “Oh dear, lots of unhappy istock #togs today – don’t worry, earn 60% with Alamy, the fastest site in the industry”.

Whether that was a smart move by Alamy remains to be seen. For one thing Alamy’s current contributors are unlikely to welcome a sudden influx of iStock refugees. For another the agency has in the past abruptly changed terms and royalty percentages in a manner not dissimilar to iStock. And Alamy has also had problems with forum firefights, although never on such a spectacular scale as iStock.

But the last word – several million of them – belongs to the iStockers. Here’s some of that community spirit in action, with a taste of the back and forth between Thompson and his contributors:

“We know change is never easy and comes with challenges”

“I really hope someone will burn in hell because of this.”

“This is not ‘like robbery’. This is robbery.”

“What kind of crackhead business model are we riding on here? We are getting raped.”

“Rotten news all couched in happy, shiny language. Like getting a beautifully-wrapped turd for Christmas.”

“Hey, where’s my kiss? I didn’t get a kiss. Did anyone get a kiss? I usually get kissed before I get f…..”

“We knew when we made yesterday’s announcements that there would be a lot of feedback.”

“I think you would have been better off saying nothing.”

“What drugs do you use?”

“HOW MUCH FRIGGIN PROFIT DO YOU NEED MAN? If you cant operate on a model such as this you’re just a failure and a failed company. We all know that this company is a fucking cash hog. Getty would not have bought you if you weren’t.”

“You can’t survive on 60-80% of the profits from a product that you have 0% ownership in? Sad. Pathetic.”

“So I guess all those glowing announcements about how great iStock was doing and how much profit it was making year after year was all lies.”

“Money isn’t going to be what makes you all happy.”

“So THAT is your response to this mess?? Wow, thank fuck you’re not my boss!”

“Oh, for fucks sake … leave out the pathetic, for-the-camera, misty-eyed rhetoric will you? It isn’t going to wash this time.”

“Don’t pee on my leg and tell me it’s raining.”

“Pardon me while I vomit.”

“Cry me a fucking river Kelly. You’re all a bunch of spineless fuckwits and you’ll get what you deserve.”

Bookmark and Share

48 Responses to “iStockphotos “Unsustainable” Business Model: From Crowd-Sourcing To Crowd-Shafting?”

  1. Rob Walls Rob Walls says:

    Those of us in mainstream stock who have put up with nearly a decade of bullying my microstockers with their arrogant belief that they were involved in a viable business, can’t say we are not delighted at this turn of events…but stock photography is unlikely to ever recover from the damage caused by this so-called “business model”.

  2. Sheila Smart Sheila Smart says:

    Thanks for the excellent precis, Jeff. I am sure very few photographers would have the time to wade through the enormous amount of spleen venting from the iStock forum members. There is an element of schadenfreude on sites such as the Alamy forum (myself included!) at the “plight” of microstockers but very little sympathy. I doubt if this is the end of microstocks. Like Medusa, if one head (iStock) gets cut off, there will be several more picking up gullible photographers almost giving away their work.

    Sheila

  3. Alan Bailey Alan Bailey says:

    Well written Jeff. You nailed the mood. Poor iStockers. Poor, poor everyone.

  4. sloggz sloggz says:

    You’d think with the great power of the Internet and legions of the furious they could just establish a co-op site themselves and get appropriate royalties.

  5. Graham Trott Graham Trott says:

    who is Jeff?

    Wouldn’t it be great if all the microstock agencies came crashing down with this one?

  6. Bettina Bettina says:

    Great analysis, Jeremy, большое спасибо! Especially loved this comment: “You can’t survive on 60-80% of the profits from a product that you have 0% ownership in? Sad. Pathetic.”

  7. Sheila Smart Sheila Smart says:

    Sorry, mea culpa – thanks Jeremy!

    Sheila

  8. Peter Davies RM (Cpt) Rtd Peter Davies RM (Cpt) Rtd says:

    Come and talk to me. I would welcome your close proximity with such delight.

  9. J-F J-F says:

    Thanks for the summary. Perhaps a good time to get a PhotoDeck website and keep 100%?

  10. Baldrick Baldrick says:

    Excellent summary. The Alamites shouldn’t gloat too much, it’s probably really about slicing iStock commissions down to 20% to match Getty’s. The “unsustainable” claim is entirely unsustainable. Alamy’s business model is clearly less robust than iStock’s.

    The one thing your blog missing is the effort being made to persuade iStock customers to shift their buying power to other sites which, along with its image, is the only real potential downside for iStock/Getty. If even a small percentage of buyers move it will completely undermine the effort to boost profits.

  11. phil phil says:

    Great post!

  12. Marco Secchi Marco Secchi says:

    Very informative post…unfortunately so very true!

  13. [...] over the entire mess here, even though it would be exquisite fun. Instead I’ll point you to Jeremy Nicholl’s excellent post on the original announcement, and the iStockphoto contributor forum where you can [...]

  14. Martin Cameron Martin Cameron says:

    Many thanks for an interesting and illuminating article. While this is serious stuff I must confess to finding great (smug) amusement in the quotations.
    I have never understood why so-called agencies, relying totally on photographic images, treat the suppliers with such disdain – nor why the suppliers stand for it. I sincerely hope they leave in droves.

  15. Jeff Greenberg Jeff Greenberg says:

    “Alamy’s business model is clearly less robust than iStock’s.”
    No, its not clear. From who’s point of view?

  16. [...] analysis by Jeremy Nicholl: iStockphotos “Unsustainable” Business Model: From Crowd-Sourcing To Crowd-Shafting? Comments (0) – Filed under: Stock photo — Francis Vachon @ 7:37 [...]

  17. ha-ha-ha-ha-ha! My sides hurt, really they do. Those “last words” would be hysterically funny if there were not stories behind every single one. Awfully glad to have gotten out when I did….

    The business models, the methods, all of it is changing so fast it’s just a blurrrr right now.

    Excellent photography will eventually be funded and/or bought/sold–somehow, somewhere; but for right now, the path photographers need to take is not very clear.

  18. Matt Matt says:

    Does anyone here truly believe that microstock is going away, that it does not have a place? Istockphotos may come and go, but the model itself is not going away. Sorry “pros.” The genie is out of the bottle.

  19. Jon Lisbon Jon Lisbon says:

    The immense problem here is the total lack of sophistication in not understanding the commercial nature of intellectual property. The microstock model is a cancer to all “creatives” because it is based solely on the cost of distribution. The only thing they care about is that they can profit by distributing images from an electronic database. There is no concern over the cost of manufacturing
    (that is the photographers burden), and there is no importance attached to usage as again they are only looking at how much it cost to distribute. There is no comprehension for the true value of IP in the marketplace. As soon as any manufacturer (photographers = manufacturer of IP) gives up control of pricing to a distributor their dead. Of course it is an unsustainable model. It is not a genie that has been let out of the bottle it’s Pandora.

  20. [...] the forms (here). You can read an excellent write-up on the whole ordeal at Jeremy Nicholl’s, The Russian Photos Blog. It’s not really a topic I’m interested in, but what really caught my eye was the bit [...]

  21. Of course it’s unsustainable. It has always been unsustainable. It is a business model fabricated from thin air by a group of VC’s who KNEW it was unsustainable, but a big enough thorn in the side of the real business that it could be sold.

    And they did… made a bunch of millions.

    And then Getty – not a company particularly interested in their core business or their ‘partners’, ‘contributors’ or whatever they call them – continued upon this path.

    Interesting to think how many people have been saying this about micro-stock for a dozen years or so. Vindication comes close. Personally I blame the piss-poor economic knowledge taught (or not) in our society. Stupid is as stupid does.

    I have railed against this abomination of pure idiocy from day one. Selling images for a dollar.

    But now we have a whole new genre of photographers… rubes they are now called. See… the millions that their images have sold for will NEVER be received back, they are now the ones who trained the clients that $30 was a great price for a cover shot (TIME), and they will NEVER see enough return to pay for their damn flasheethingee.

  22. [...] on September 14, 2010 at 10:50 AM The Russian Photos Blog has an excellent writeup covering a full-out firestorm between iStockPhoto and it’s contributors. Apparently the agency is claiming that it’s fundamental business model is unsustainable and [...]

  23. Monika Mosch Monika Mosch says:

    as a small traditional stock agency hosting and managing the copyrights of pro photographers we where watching the microstock flea market and where waiting for the day the relationship between contributors and photo agencies is getting confused. It was just a matter of time.

    Next to the “Schadenfreude” the “Raffgier” would suit.

    Great quote.

  24. [...] part of the ‘professional’ photography world for quite some time. Today’s post “iStockphotos “Unsustainable” Business Model: From Crowd-Sourcing To Crowd-Shafting?&#8221… is a wonderful report of what is going on inside that world of micro payments for photography. And [...]

  25. [...] forum post by iStockphoto CEO discovering other contributors’ reactions. I also recommend this post as a good intro to the long and unclear iStock statement in the forum [...]

  26. Tony Sleep Tony Sleep says:

    Jeremy, that’s a great piece. It would be nice to be able to feel maybe there is a God, maybe even a vengeful one. But there isn’t.

    As has been said above – microstock is not going away. Nothing short of a global economic collapse back to the C15th is going to stop it. So long as the Flickr’ing masses will give their work away for a few cents more than the nothing they would have had, it will continue to destroy any hope of a sustainable photographic ecology. And without that there is no means to support the creation of work that matters.

    It’s true, photography always was elitist. What distinguished the elite was that they were actually good at photography, through dedication, obsession, arrogance and usually self sacriifice. Each generation aspired to this, and tried to carry the medium forward. Now it’s just a meleé of mediocrity and handjobs in forums, with a smattering of big name stars who have their PR together. There aren’t going to be any more HCB’s or Winogrands or Stieglitzs or Kleins or Strands or Friedlanders or Meyerowitzs or Brandts or Westons or .. or…

    Nobody can now live on bread and butter work whilst they hone their skills and maybe someday become a master, because there isn’t any bread. Only rich kids and part timers can now photograph and eat as well. The new elite: not distinguished by their work, by the quality of what they have to say, but by their lust for bylines at any price.

    Well, nobody owes us a living even if apparently we owe Getty shareholders one. The tragedy is that those who purport to love photography have carelessly destroyed it by turning it, and all of us, into a disposable commodity. Clients now know they need only pay $1 or so, that nobody gives a stuff about copyright of something so worthless, that all photographers really want is a byline.

    This sabotage makes me angry. I don’t blame Getty, nor iStock, nor clients who want to pay zilch, I blame photographers for their wilful, blind selfishness. “Beating the pro’s at their own game?”. You ignorant muppets, all you’ve done is shit in the ocean so now it’s poisoned, stagnant and nothing can live in it except corporate parasites. Who, you are now surprised to learn, mean to eat you alive. So much for “democratising the medium”, you just sold it wholesale, for peanuts. Shame you didn’t think it through 10 years ago, eh? What’s it going to be, 15% now? 10%…5% in a year or two? Welcome to the real world of professional photography 2.0. You made the bed, we all have to lie in it.

  27. [...] на этот пост CEO iStockphoto. Можно также порекомендовать этот пост в качестве неплохого введения в суть того, что пытался [...]

  28. Microstock has devalued the stock photography business, it would seem that the start of stock in web 2.0 was that low quality images taken by non professionals could be sold and used, but the professionals sold out adding their stock images and improving the standing of these microstock sites that have popped up.

    Where the bigger companies are swallowing up the little ones, there are little resources available for high quality photography to be sold as stock for real money, and it will not be until all photographer offering quality images quit these types of sites and head up the food chain.

    Leave cheap images to the cheap stock companies and watch them sink and fade into the background.
    I just started Stock Photo’s as part of National Photographer here in the UK and I don’t see why or how companies are taking anymore than 20%, in fact I plan to charge nothing and take nothing and relay on the photographers making a contribution to keep the business going. As National Photographer is run by photographers for photographers you could see how this would work, but I have no intentions of selling $1 images, maybe $30+ and really aim to put the value back into photography.

  29. mystockphoto mystockphoto says:

    Hi All,
    Nicole,
    I’m not an Economic Mastered Guy and I don’t want to insult iStock/Getty, but if a business model is not able to pay (already low) 20% commissions, I mean for the non-exclusive contributors, there’s something wrong – and not in the royalty structure. Otherwise, the reading key of the news is not limited to the unsustainable commissions scheme… iStock wants to be a different company, they want to work with Exclusive Pros and they want to move away from an User-generated content website. I hope that the strong iStockers could continue earning as now and much more accessing the premium collections, but for the amateurs and/or non exclusives there isn’t a good deal anymore.
    Regards,
    Roberto

  30. Noriko Cooper Noriko Cooper says:

    Thanks for the article. Jeff, you left out some very important information. I am a contributor to Istock. The changes mostly effect the exclusive photographers. The income decrease will only effect 24% of that community. These changes don’t effect how much I am earning. The part that I don’t like is that each year I have to continue to sell a certain amount of images to stay in the 40% that I am currently earning.

    The way they set up the new commission is very smart on their part. The people that sale the most images make the most money. Instead of your income being based on a lifetime of downloads it’s based on what you do each year. Which means, you have to be a consistent annual producer to keep earning. I must admit I am a business person first. I don’t mind hard work. Most of the folks complaining simple can’t or don’t want to work that hard.

    I personal don’t like the changes. However, Istock is being very fair. If in the current year a photographer sells more images that would put them in a higher paying bracket Istock will raise their earnings for the rest of the year. If they go below their target Istock will not lower their earnings until the following year. You’re right about one thing, people are whiners.

    What I have noticed about most artist that I come in contact with is they are not good business people. If they would stop complaining and blaming everyone and everything else for their woes, and focus on adjusting and adapting to new circumstances and situations, they could better focus their energy in areas that would be more productive.

    I started this stock business 4 years ago. I currently rank number 58 out of about 30,000 photographers on istock. I had no training. I didn’t even own a camera until I bought one to start doing this photography business. I read lots of books and went to a few workshop. I am just an ok photographer. I still have tons to learn. My point is this, if the pro photographers had adjusted and adapted I seriously doubt there would have been room for someone new with no experience like me. Most top microstockers earn anywhere from 7k to 40k per month. And I can think of one off the top of my head that probably earns more than 40k per month who also was an amateur 5 year ago.

    My intent in typing this is not to offend but to clarify a few things. I also wanted to point out that Istock is still an awesome company to work with. I wish you all the best.

  31. [...] This post was Twitted by PierreLucDaoust [...]

  32. bunny bunny says:

    RM folks, I started out with film stock long ago. Now I shoot for many micro agencies. We may be in for an adjustment, but you are over. In case you haven’t noticed, print, with its requirements for high resolution photography, is on its way out. Numerous rivals for the iPad will be released next year and many young adults (target ad market) are already reading slick magazines on Kindles and similar black and white devices. (I’m going to order one myself today.) Even billboards are being replaced by electronic signs. My advice, approach local businesses and catalog publishers. Go back to doing portraits and weddings. Diversify or retire.

  33. Samba Samba says:

    Dreamstime is now offerning special one-time payments per pics for photographers, who been Exclusive with an other agency, but joining Dreamstime instead

  34. Samba Samba says:

    Dreamstime is offering one-time payments for photographers, who were Exclusiv with other agencies, but but resigning there and joining Dreamstime now.
    Smart move!.

  35. M_Lepetit M_Lepetit says:

    Microstock agencies are fully sustainable. If istockphoto fails due to an inadequate policy, there are others. As a costumer, that won’t made to switch to high priced RF or RF… all I will do, if needed, is changng to any other of the succsefull micro agencies. On the other hand, right now I’ve seen some macro shots coming from macro agencies being pushed to istock, and these shots are below average compared with stock average quality; in some cases, even sub-par.

  36. [...] happened to cross this story from photographerGrover Sanschagrin on twitter where the title of the post reads iStockphotos Unsustainable Business Model: From [...]

  37. Tyler Olson Tyler Olson says:

    Very well composed post Jeremy, this gives a great over-view of ‘what happened’ for those arriving late to the party.

  38. [...] irate professional photographer even entered the online debate to reprimand the amateurs who participated in iStockPhoto: All of you have been so happy to [...]

  39. [...] irate professional photographer even entered the online debate to reprimand the amateurs who participated in iStockPhoto: All of you have been so happy to [...]

  40. John John says:

    @bunny, Go and shoot and sell for a 1USD and let the pro do the real job.
    Ooh I forgot you , you look the pro and copying the ideas.
    My advise to you and to your fellows : shoot 1 million images …….maybe you can make 100$

  41. [...] It’s not evil, but let’s get real, crowdsourcing isn’t innovation as much as novelty. Structuring a business around crowdsourcing is doing little more than upping your pool of freelance talent in order to put downward pressure on price and upward pressure on uniqueness. The former almost always happens, the latter is much tougher to achieve. [see iStockPhoto] [...]

  42. Steve mason Steve mason says:

    Interesting article on WSA about istock from industry veteran

    http://www.whichstockagency.com/en/33/page/2/opinion/525/full

  43. [...] the language employed was not as colourful, the row had echoes of last year’s iStockphoto riot when contributors to the microstock agency were outraged at a change in their royalty percentages. [...]

  44. Joe H. suggested: >>>you need to read the founders letters and then tell me they weren’t religeous!<<<

  45. [...] iStockphotos “Unsustainable” Business Model: From Crowd-Sourcing To Crowd-Shafting? (jeremynicholl.com) [...]

  46. Dee Fingado Dee Fingado says:

    You ought to be a part of a contest for one of the best blogs online. I will highly recommend this site!

  47. [...] approach – what have you done for me lately – was behind iStock’s disastrous September 2010 changes that introduced the Redeemed Credit (RC) system for royalties. 123 royalty free, a smaller agency, [...]

  48. I am very late the party on this one, but I had to take a moment to let you know how much I appreciate this article. Microstock is a cancer, like so many modern “businesses” it exists only to exploit and abuse people too stupid or ignorant to know better. It’s the Walmart of the photo industry. And it’s very, very sad what its done.

Leave a reply: usual Marquess of Queensberry rules apply.

(required)

(required: will not be published)

What I’m thinking…

    Translate this Page