iStockphoto Changes Royalty Rates, Dishes Out Pay Cuts to Most Contributors

Seemingly out of the blue, iStockphoto announced a major change in stock photography royalty rates starting in 2011.

Gone are the days of when a contributor’s canister level (based on number of total downloads) determined the royalty rate received by the contributor.  Starting in 2011, the royalty rate will be based on annual “targets” of redeemed credits.

This is about the best summary (from full time iStock contributor Nicole Young) of the new royalty structure I’ve seen so far:

iStock Nicolesy

The new formula for calculating commissions and determining what kind of impact it has on the current royalty rate for contributors is challenging, as evidenced by nearly 1500 comments posted in the 8 hours since the announcement was made this afternoon.  I’ve made it through about 7 pages of comments on the thread, and see nothing but negative responses thus far.

Many ill comments are directed at Getty as the corporate villain, and many contributors appear to be offended by the manner in which the announcement was made – paying particular attention to the following statement:

. . . . we wanted to produce a solution that:

- would not change most contributors’ total compensation (except for the better)

See the full announcement and forum thread here.

Are you an iStock photographer affected by this change?  Feel free to chime in with your thoughts (good or bad) in the comments below. (Just keep it clean.)

UPDATE: After 2631 responses, the iStock thread has been locked and a “response from HQ” is coming soon:

OK, the folks at HQ have been reading the responses and have been putting together a reply. I’m going to lock this so everyone can catch their breath for a few minutes. I’ve been told the response will be posted within the next hour.

[via sylvanworks]

UPDATE 2: The official “response from HQ” has been posted here (with around 1300 comments in the first 9 hours it has been up).

Based on an initial reading, it looks like iStock has backed off of the original warm and fuzzy announcement.  Now, the tone of the official response would lead us to believe that iStock will go under if it does not stop the bleeding from paying everyone 40% and all those non-exclusive contributors must “bear the brunt” and accept a 25% decrease in commission.

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.

. . . .

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.

Essentially, nothing has changed and iStock is moving forward with this plan in spite of the outcry from the community.  The comments are even worse in this thread, with many contributors stating an intention to move away from exclusivity and take their library of images to other microstock sites.

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Comments

  1. strickke says

    Waiting with bated breath. I am just under 1100 uploads short of making the gold canister level under the old model. I was considering making a push to achieve gold by the end of the year. Now, I have been checking out other microstock sites like Stockfresh.

    Another interesting phenomenon: I have not had a single download since 8:41 am this morning. Unusually slow for a Wednesday. Are buyers also distracted by all the upheaval and reaction?

  2. Techward says

    Thanks nicolesy for the twit. I was pursuing signing on with them, but if this is an indication of how they do business, I think I’ll pass.

    I cannot imagine that there isn’t great $$ in it for them on the previous model.

  3. istockExclusive says

    I just made it to the Gold level as an exclusive with iStockphoto. I have been with them for over 4 or 5 years… this new plan will drop me from my newly attained percentage to one that is lower than where I was before I reached the Gold milestone. I sure does not look like the company or the contributors are backing down on this and the “nice” spin that iStock put on the announcement at first, and the GRIM official response is insulting to say the least. That they tried to spin news like this in such a sunny wonderful way… is unprofessional and demeaning to the people who PROVIDE the product they sell!

  4. Mark Higgins says

    I don’t get it. They cut us independent by 25% and then claim it was because exclusive were earning too much???? They also cut many of the exclusives. So who is the winner? Istock shareholders, that is until sales fall.

  5. independent says

    MOST (over half) contributors are “non-exclusive”. They’re slashing our commision from a lousy 20% to as low as 15%. Sales have been sliding because they keep putting the prices for buyers up and up and up. They want us to spend thousands on top-end cameras to get past their crazy quality standards for “noise” and “artefacts” that you can only see at poster size. And on top of all that they want to cut our pay by 25%. and keep 85% for themselves, all of it made off our art. They say they will have turnover of about $220 MILLION next year and their slice of over $150 million isnt enough to run the company. Cmon people, don’t put up with this. Buyers, take your business to places that charge you less and treat people fairly like dreamstime or shutterstock

  6. karfarzel says

    This is what happens when you get wealthy investment vulture capitalists pulling the strings, at the top, Thompson and the Getty’s management are only puppets, they answer to the owners, in this whole saga, Hellman & Friedman are the owners of Getty’s, and istock.

    This whole thing about unsustainability under it’s current form, does not fit with the siphoning that is now going to the real owners, Hell & Fried investment bankers.

    They want to increase their income stream significantly. You only need 15 mins to research the real owners to find out what their businesses values and models are and the type of businesses they buy out,
    istock and getty’s are now milking cows to capital investment bankers.

    All artist’s want is a fair royalty to be paid for work created, wether it was created years ago or yesterday many of those on Istock only have seasonal galleries so they will be victims under the new system.

    You have people at the top who now own the business, but may have never worked within the industry as an artist/photographer so they have no comprehension on the value of work created, and what is a fair royalty payment.

    To earn a 15% royalty on my work will hurt me, so I will now flood my images throughout the net, and eventually leave istock, my future exclusivity will now be worldwide.

    If thousands of niche non exclusives leave or flood their portfolios on other sites, this will damage Istock. It was once the non exclusives who first built Istock, treating them as they done by lowering to a base 15% royatly is just insulting.

    Ultimately it will be the thousands of buyer’s and mid level exclusives now who will think twice about supporting a company that does’nt pay a fair share royalty to it’s content creators, the 15% for non exclusives, is just so wrong.
    Once buyers do find out where their money really goes, and who the actual owners are, and how the contributors are treated, if they have real business partnership morals they will support the agencies that offer the artist a reasonal royalty payout, and those that respect their contributors.

    Istock have now lost all credibility now to entice the creative stars of tomorrow, the cameleon has now changed it’s colours. And they are really ugly colours.

  7. R Bayliss says

    A disgusting display of greed by iStock. The thin veneer of slimy spin cannot hide the fact that a 25% cut in pay to contributors means substantially more profit for the grabbing Getty group. As a contributor who is going to be seriously affected by this, I would urge all buyers (as per the comment above) to take their business elsewhere. Many of the same images and videos are available for a lot less money on other sites if you just look around… try Pond5 for example.

  8. Sumos says

    I am a Non exclusive contrib there and I will see a cut of 20% as it is. To get back to my current LOW royalty of 20% I have to bring in 1.4 MILLION credits for Istock which translates to something close to 1000 dl PER day every day of the year. On top of that IS will change these credit levels they base royalty on every year and I have never heard of such levels going down so it will just go further into the realm of fantasy of ever going up levels.

    For Exclusives at IS thinking about alternatives I have some help for them which is found here below.

    It is a submission portal called Isyndica (url supplied below)

    http://vds.isyndica.com/Affiliate/sumos

    This site in itself isnt an alternative to Istock, what it does is it offers one place to upload your work to and from there you can submit it to multiple sites, so you upload once to one place which then distributes it to the sites you want to submit to.

    It also offers overview of how the best sites are performing and also how each site you submit to is performing for you. On top of that it functions as a backup of the work you upload there and you have overview of what images you have uploaded and to which sites these images have been sent to.

    Before you submit to any sites you obviously need to register with those sites but you have in one place at Isyndica information about many many different stock sites and others as well. For me this has been one of the best investments I have made regarding microstock

    the subscriptionplan runs from 49.99 79.99 and 149.99

  9. Colin says

    I am a contributor at Istockphoto.com and I will get a “pay cut” of 25%. It is pure greed at work, and has nothing to do with ‘keeping the community and the company alive’. They will benefit, we (the contributors) will lose.

    They try to soothe our justified rage with words like:
    “But money isn’t going to be what makes you all happy. You want to know that this is still the best place to be, to hang out, and sell your work. You may not be convinced today like you were last week, but it’s our job to make sure you feel that way again soon.”
    (http://www.istockphoto.com/forum_messages.php?threadid=253522&page=1)

    It’s sad, but I can’t help but laugh at the stupidity of those words.

  10. Justhink says

    35% for exclusives is a slave deal, mainly if considering the ISP´s exclusivity monogamic exigences. 15% for independence is insulting even for a slave.

    Such a low rate wouldn´t make most independents to opt for exclusivity, once ISP is the best place to sell so far?

    Isn´t ISP HQ staff forcing to that movement? Aren´t they in some way willing to embrace the most number of exclusive artists that could be possible? Would them doing just the first step for an exclusive-only agency in the future? They became very big, strong and hungry.

    What do you think if the main competitors agencies(Shutterstock and some others) could take the event as an oportunity to launch their own exclusivity program under a very high royalty rate for contributors to dispute the best profissionals with ISP?

    The contrary – if the market starts following ISP cutting-rate phylosophy… No, is better do not think on such a disaster!