There have been a lot of changes at iStockphoto in the past week, the biggest one being the royalty structure changes for the contributors. I’ve had some time to really think about this, so instead of posting my thoughts on some random forum I thought I would discuss it openly on my blog.

First of all, here’s a little bit about me: I’m a photographer and I make my living by licensing my images through I currently make 40% royalties on my images as an exclusive photographer with iStock and I sell enough to support myself, pay my bills and even lease a small studio near my home. I work hard at this business and I love my job.

As for the changes … in a nut-shell iStock has determined (and known for some time) that their current royalty structure is unsustainable (info on these changes is detailed here). In order to do so they’ve basically set sales levels that each contributor has to reach in order to maintain a set royalty rate. In the past it was all based off of historical download figures … for example if a photographer sells 25k photos then they will stay at 40% royalties, regardless of how many images they sell from that point forward. However starting next year our royalty rate is based on the previous year’s “redeemed credits” and we are required to sell a certain amount of credits each year to maintain that level.

So what this means for contributors is that those who are not going to meet the credit level for the end of this year will drop to a lower royalty percentage. It is affecting both exclusive and non-exclusive contributors, and even admins and inspectors aren’t immune from the changes. iStock is confident that 76% of its exclusive contributors will see either no change or an increase in royalties (mentioned here), and they’ve done a lot of math and projections to get those results. Kelly Thompson (iStock’s COO) had even stated that they will re-evaluate the target credit levels at the end of the year if their projections are off.

iStock is a business, they need to make money … that’s just the bottom line. They’re not being greedy and trying to screw the contributors over, nor are they blindly following orders from Getty. They don’t want to see people lose money, and this was a difficult decision to implement, trust me. iStock is doing what is necessary in order to run their business—they are addressing a long-term problem to make sure that iStock becomes more profitable as it grows. I get it … even if I end up being one of the unlucky ones, I get it.

So … will these changes affect me? Right now I honestly don’t know what will happen to my royalties next year. Since I don’t know what my numbers will be at the end of the year then I’m bracing myself for dropping to 35%, which would mean a 12.5% drop in earnings … roughly a month-and-a-half’s worth of income. And yes, that’s a lot of money, folks. Am I happy about that possibility? Not really, but I will still be okay if it happens. I’ll have to make changes, but I won’t have to drop everything and find a new job.

In my opinion this new royalty structure makes sense. The artists who are creating new content, selling it and turning a higher profit are more valuable to iStock, and it’s going to encourage all artists to produce higher quality files in order to maintain and increase their sales output. I don’t want my royalties to go down—none of us do—but whatever happens next year one thing is sure: I’m extremely motivated and encouraged to create new content and am now very much accountable to myself to do so if I want to continue at my current 40% royalty rate.

I can appreciate the fact that everyone has their own opinions about this, since everyone’s circumstances are different. I stand to potentially lose several thousand dollars because of this decision … yet I’m staying with iStock and don’t plan on going anywhere. In the long run I anticipate this move to be more profitable to those who keep up their hard work of creating quality content. My success is in my hands alone, and there will always be challenges and disappointments. This is one of those times, but it’s not slowing me down … in fact it’s making me stronger. :)