Tuesday, September 14, 2010

Don't laugh at the istockers

A Clash Of Cultures

There has been a big reaction to istockphoto's recent announcement that their current business model 'is unsustainable' and the consequent drops in commission rate payouts they are introducing. It has ranged from a huge outpouring of disgust and hate from istock's microstock contributors to a lot of smug 'told you so' glee on the side of traditional stock photographers and agencies.

But you know who is really laughing, quietly, in the background? Getty Images. Because their ruse has worked, and both groups of commentators seem to have fallen for it.

Istockphoto was built as a community. The original very low payout of 20% was the direct result of a business model based on being cheap. To be able to sustain the business when selling a product very cheaply it was necessary to take a uniquely large cut of the low per-image earnings. However, the community was designed to reward its members. As they helped the business to grow and be successful, the community was rewarded with a larger percentage of the earnings from their stock images.

Then istock was bought by Getty Images.

Getty Images has a different business philosophy which has nothing to with community or recognising the value of their suppliers, it is purely about profit. I have no doubt that istock is hugely profitable for Getty Images, and that their profits are increasing year on year, but Getty Images sees it in a different way. Because the istock community is rewarded over time with increasing percentages, and even though Getty Images is increasing their profit, they see that their percentage profit of the total income is decreasing. And because Getty Images is all about profit, not about supporting a community, this results in a Clash of Cultures. Getty's business philosophy just does not fit with the istock community philosophy.

Supposedly the percentage payouts of istock (even though they are lower than just about every other agency in the business) are 'unsustainable'. The vast majority of non-exclusive contributors are having their royalties reduced from 20% to 15%. So Getty earning 85% of the earnings is sustainable, but earning 80% isn't? This just does not wash, particularly when they take a smaller cut on exclusive sales. There seems to be two basic aims of the royalty split changes at istock. The first is to increase the overall profit of Getty and reduce the payouts to contributors, and the second is to make it less and less atttractive to be non-exclusive. Why?

Microstock has become a race to the bottom. This is what is really unsustainable. 'Traditional' microstock agencies like istock are being undercut by sites offering 'all you can eat' microstock subscriptions. Another fly in the ointment are microstock 'price comparison' sites. These make it easy to compare the price of the same image across multiple sites, and this makes istock look (relatively) expensive. The only way to combat this issue is to have exclusive content, so that it cannot be bought cheaper elsewhere, and that is why istock is making non-exclusive less and less attractive to the contributor.

As far as I see it, this has nothing to do with microstock being 'unsustainable', it is simply Getty Images returning to their old tried and tested business model based on the 'frog in the pot' experiment. Put a frog in a pot of cold water and turn on the heat. When does the frog jump out? It doesn't, it just sits there as it slowly gets hotter and hotter, until it gets boiled alive. Getty has done this to their traditional photography suppliers and are now doing the same thing to their istock contributors, because they know the vast majority do not have the guts to jump.


  1. Good comment on Getty`s ugly business methods. While happily not involved in iStock, I see Getty as the Grim Reaper responsible for the demise of once competitive agencies and ultimately of many excellent photographers.

  2. That's the fact, Christine ! And could we expect some reactions from the unhappy "ripped frogs" in a near future? I hope so!
    What do you think?

  3. nice article chris!
    In any case it is exciting to see so much going on in this industry. I have a friend who went exclusive with istock two months ago. Had he known this would happen I am not sure he would not have done that.

  4. These companies will always do what they can to make the most profit. For iStock pre-Getty that might have been to get a 'community feel', for Getty they might be more transparent... but in the end, it's just different business models to build profit.