When does stock photography become microstock photography? Can it be cheaper than microstock? And what happens when a supposedly non-microstock agency offers the same images as a microstock site, but for less?

Stock agency Alamy found themselves facing a forum firestorm last week when a leaked marketing email revealed the existence of a previously unknown Alamy product called Premium. Contributors were infuriated not just by the fact that they only heard about Premium through a leak rather than an Alamy announcement, but also by Premium’s terms – $49 for virtually unlimited commercial usage for 10 years.

Although 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. As at iStockphoto, contributors took to the forums to denounce the Premium deal: Alamy staff made several attempts to calm the situation, but these seemed only to add fuel to the fire. Eventually Alamy CEO James West stepped forward with an attempt at a definitive statement on the company position and Premium.

But West’s statement prompts at least as many questions as it provides answers:

• He stressed that advertising use was excluded from Premium, but does the deal include the far more common editorial usage?
• Although described as a test, West claimed that some Premium clients had already upgraded to high ticket advertising licenses: so had the newly revealed Premium secretly been on the market for some time?
• Premium was described as only one of a number of tests, some at a higher price point: but are there any at a lower price point?
• It was stressed that there is no opt-out from Premium, but contributors quickly found a loophole: by placing a single restriction on images those were removed from Premium offerings. So would Alamy move to prevent contributors placing restrictions on their images?
• Some larger Alamy contributors’ material seemed absent from Premium: so had those contributors been given the option to opt-out in advance?

When these questions were put to West on Friday he declined to answer, meaning that – at least in theory – all the above are possible. His only comment:  “I don’t have anything further to add other than to remind readers that these price experiments will account for less than 1% of our revenue this year.”

But the most intriguing question – which West also declined to answer – is prompted by his most startling claim: “Our trials have shown that we can cannibalise microstock market share at a much higher price point.”

That’s a pretty daring claim on two points. Firstly, it’s generally accepted that microstock buyers are primarily motivated by price: the idea you can get them to pay much more sounds like quite a challenge. But it’s the second point that’s more interesting: West’s assertion that Premium really is more expensive than microstock.

People unfamiliar with the microstock market will instinctively buy that: popular belief is that typical microstock prices are no more than a couple of dollars. But that’s really not the case: those dollar deal prices only ever apply when clients both buy huge amounts of microstock “currency” – so-called credits – toward future purchases and also make limited use of the images they eventually license. Once a client buys and uses a microstock image in the way Alamy are pitching Premium – maximum size, no subscriptions and virtually unlimited usage – microstock prices rise dramatically.

How dramatically? For a direct comparison take the casino image above. It’s available Royalty Free at Alamy in its largest size for $365. But it’s also available from iStockphoto, the microstock market leader, at the same size and usage for $213.75, $65.25 or $54, depending on whether it’s bought Pay As You Go, or on a corporate or subscription account. However that’s not the whole iStockphoto story: those prices rely on the purchaser buying a massive number of credits toward other images. To get even the PAYG $213.75 price you first have to buy 20,000 credits at, gulp, $19,000. If you simply wander in the iStockphoto door today and just want to buy this image alone as a one-off it will cost you $430. But here’s the real figure that counts: the same image is now available at Alamy Premium – for $49.

This is not an isolated example carefully chosen to browbeat Alamy. As at other microstock outlets, prices at iStockphoto are dictated by three factors: the price band of the image chosen; the usage; and the way credits are bought. Istockphoto have five price bands; the equivalent license to Premium is XXLarge-Extended License-Multiseat-Unlimited Reproduction; credit prices run from $0.24 to $1.63 each. The very cheapest you can buy a Premium-equivalent license at iStockphoto is $52.40; but that requires a subscription account and an investment of tens of thousands of dollars in credits. At the other extreme, buying the most expensive image in the most expensive way, the price rockets to $800.

In practice most prices will be somewhere between those two extremes. But one thing is clear: on the publicly available figures it is impossible to buy a Premium-equivalent licence at iStockphoto for as low as Alamy’s Premium price tag of $49. Alamy will have run their own figures, but unless they’ve seriously stacked the deck it’s very hard to see how they conclude that Premium has a higher price point than microstock. On the contrary, Premium isn’t just a microstock product: it has a sub-microstock price.

There is of course one key difference between Premium and microstock licenses: the latter include advertising and the former don’t. During last week’s damage limitation exercise Alamy made great play of this, claiming that Premium customers “upgrade” to big-ticket ad rates. But this is the photo agency as lottery: make your images available at a bargain price and you might hit the jackpot of an advertising sale. Given the sheer number of Premium images available – some 25 million – the odds of any single one being upgraded is infinitesimally tiny: the truth is that most $49 Premium licenses will remain just that.

Last week’s row developed a comic sub-plot when one Alamy contributor by the name of Dingdong posted comments he attributed to West:

“The simple answer for our contributors is move with the times or get out. We are a business not a charity to our contributors. We have serious contributors whom we have contacted and agree in principle to the need to change.”

Although the post was obviously a hoax that didn’t stop it reappearing on About The Image and elsewhere as a genuine quote from West. Unsurprisingly the Alamy CEO was unimpressed by this display of Internet juvenilia, describing it as “comments that I would never have made.” But the truth is when the chips were down West’s own message was little different:

“There is no opt in/opt out available for this. You can, of course, opt out of Alamy whenever you like. We provide the marketplace and set the ground rules, but it is entirely your decision as to whether you want to participate or not.”

So the lessons are clear for punters who want to try their luck in the Alamy Premium casino. The management sets the rules – and the house always wins.

‘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 can’t 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.’

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.”