Tuesday, September 14, 2010

Microstock's Sudden Brush With Karma, or Shouldn't You At least Buy Me Dinner Before I Bend Over?

It was less than ten years ago when the model for distribution of photographic images known as Microstock first reared it's ugly head and changed, perhaps forever, the stock photography landscape. Professional, skilled photographers once distributed their work thru various stock agencies charging real-world licensing fees and curating enormous collections of captivating imagery from pros who depended upon these agencies to distribute & license their work to art buyers. Back in those days, if you had a good understanding of the marketplace, it was possible to earn a very decent living from relatively decent royalty structures within these stock agencies.

Enter Microstock. Rabidly defended by those that chose to participate as a sort of fuck you to what had become an elite & greedy stock photography establishment dominated by companies like Tony Stone Worldwide, Getty Images, The Image Bank, Superstock and others. Microstock contributors viewed themselves as pioneers, taking smaller percentages of sales far, far below traditional licensing fees from the major stock houses. The theory was that lower prices meant increased sales volume. As a result, photographers producing work below the standards of the big stock distribution agencies had suddenly found homes... even incomes from their work. Suddenly, images licensed from Microstock agencies were finding their way onto the covers of major publications, delivered and licensed for fees amounting to pennies on the dollar from what would have been garnered thru licensing from traditional, rights-managed agencies.

Pro photographers heavily invested in producing work for these traditional, right-managed agencies cried foul... claiming that the business models of companies like iStockphoto & Almay, two of the biggest players in the Microstock field, were unsustainable. Citing that digital technology had enabled amateurs producing inferior work and were now wrecking the market with bargain basement licensing fees.

On September 7th, iStockphoto (now owned by Getty since 2006) COO, Kelly Thompson, dropped the bomb and confirmed what most of us already knew... Microstock models ARE unsustainable... for the contributors, that is. With an announcement posted on the agency's forum, Herr Thompson outlined the plan to drop royalty fees structures to iStockphoto's contributors. Under this new fee structure, royalty percentages to agency contributors would be dropped, for some as low as 15% of the gross sale. 

Jeremy Nichol, of The Russian Photos Blog, likened the statement to a PR blunder worthy of BP's Tony Hayward. While breaking the bad news to it's contributors, iStockphoto's chief went on to describe how business overall had increased. Nichol cites a statement made by iStockphoto in January 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 & clients."

Nichol also cites an August 9, 2010 company missive, which reports:

"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"

OK... I was never good at math, but something stinks here... business grows, sales increase. The business model here depends on and profits from work produced by the "contributing artists". If growth has occurred and sales have increased then, of course, payouts to those contributors would rightly increase also. What should be a win situation for all involved is now appearing to be an atavistic exercise in the very same greed & hubris railed against by those very same "pioneers" who set out to change the landscape of stock distribution and the many foolish contributors who tied their fate (the most profitable of them tying their fate EXCLUSIVELY) to this pioneering effort. 

And the burghers are not the least bit happy with the news. All is not well in the village. Pitchforks are being sharpened and cauldrons of oil have been placed on the pyres. At the iStockphoto forums, over 3,336 posts, overwhelmingly negative before the thread was locked, were posted in response to Herr Thompson's initial announcement. Thousands upon thousands more have been posted in new threads discussing the change in royalty structure in recent days. One of the more entertaining and spot-on retorts on this forum came from a seasoned pro who waded into the cesspit with this:

“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.”
You can read the rest them for yourselves here.

Outrage! And rightly so, methinks. Not that I ever thought that the microstock model was viable in the first place, but those that did decide to throw their creative output into that ring are now faced with trying to figure out just how many sales grossing $25, of which their take could be as low as 15%, they will now have to make to cover that mortgage payment or to upgrade from that Canon Rebel.

Bottom line: image demand is up, yet rates for the licensing of images has been in a downward cycle not only instigated, but encouraged by those who prey on the fears & insecurities of those involved in creative pursuits... or simply by those entering the field with little to no business background or real understanding of the costs of operating a profitable business model and an overwhelming desire to see their work in print. I meet these folks every day.

Viewing and treating your creative output as a commodity is unsustainable. Sure, in the current economic climate, concessions must be made from time to time. To adopt these concessions and give-away pricing structures as a long-term business model is madness. As Rob Haggart wrote at A Photo Editor:
"Trying to be the cheapest is a miserable business to be in."

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