|, iStockphoto, Microstock, Photography|My Thoughts on the Changes at iStockphoto

My Thoughts on the Changes at iStockphoto

By | 2016-12-18T17:01:17+00:00 September 14th, 2010|22 Comments

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 iStockphoto.com. 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. :)

About the Author:

My name is Nicole and I'm a photographer, author, & educator living in Lincoln, Nebraska, USA. When I'm not making photos I'm writing books and tutorials for my online store, Learn more about me and my story here.

22 Comments

  1. Dustin Bess September 14, 2010 at 4:35 pm - Reply

    So what is the benefit of being exclusive other than higher royalties? Would it be possible for you to make more money by having your library with more than one agency?

  2. Scott Bourne September 14, 2010 at 4:42 pm - Reply

    Nicole you can vouch for the fact that I have never been an iStock hater but I think that you may be kidding yourself here. I would bet BIG money that if you put the same time and effort into building and selling your own stock library you’d make twice the money. I am concerned for friends like you who rely on income from iStock. I am particularly concerned when the folks who own the company are out buying $10 million dollar condos and yet telling you that YOU have to take a pay cut. I hope it works out for you I really do. I am a little worried that those in your position have no choice but to defend the company given the heavy-handed approach iStock has taken toward dissent in its forums.

  3. Travis Williams September 14, 2010 at 4:44 pm - Reply

    I hope you take this challenge and improve your skills as a photographer and maybe learn some new things along the way.

    I think you will do great as long as you work hard and keep a good attitude.

  4. Nicole September 14, 2010 at 5:16 pm - Reply

    @Scott – I appreciate your confidence in me, but I don’t think I would be able to have my own stock site and be profitable. My content is not “niche” enough … if it were, then maybe, but the added work of maintaining it would take up all my time. I like that I can just be a photographer with iStock. I understand the risk, but any job with any company is a risk.

  5. Steve September 14, 2010 at 5:44 pm - Reply

    Great thoughts Nicole, im just a few months into being exclusive with istock. This kind of has me worried as I really want to retire from my day job here in southern Utah and just do istock as you do. Thanks for the great blog.

    Steve

  6. Adam September 14, 2010 at 5:47 pm - Reply

    I think the new payment structure that iStockPhoto has taken is a better one, as it puts them in a place to encourage higher quality photos and a way to reward people who are great contributors.

    The problem I see is that if someone like yourself is making enough money to live off of stock photography shouldn’t be getting a pay cut, but a pay improvement (assuming your year’s photos download numbers were roughly the same or better than last years). I think their qualification download numbers are too high. They shouldn’t be hurting their solid contributors like yourself.

  7. Nicole September 14, 2010 at 5:58 pm - Reply

    @Adam – I think that their current numbers are set for people in my situation (full-time, etc.) and I’m not 100% sure that I’ll see a pay cut. As it stands now, with my own projections I expect to miss the mark … but won’t really know until the end of the year. They’ve also said that they will adjust the numbers if their (iStock’s) projections are off.

  8. Brian September 14, 2010 at 6:28 pm - Reply

    Nicole – I enjoy your blog.

    I don’t agree that this was necessary from a business perspective. In the long term scenario, iStock would have only paid out a maximum of %40 of sales to contributors. That was the worst case scenario: down the road they could keep only 60% of each sale. They don’t manufacture a product, nor have raw material costs. They facilitate transactions.

    IMO, it’s wishful thinking that this will “encourage artists to produce higher quality files.” We already had HUGE incentive to produce great stock photos: The more great photos you made, the more money you made. Under the new structure, many people take a pay cut and others will have to scramble just to stay put. Those taking a pay cut may have to forego equipment or studio upgrades, the very thing that could have helped elevate the quality of their files or the quality of the library. We are talking about thousands of dollars lost for many people. That’s real money that could have been reinvested into improving one’s craft.

  9. Sean Locke September 14, 2010 at 6:48 pm - Reply

    “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.”

    Sorry Nicole, they already become more profitable as it grows. That’s how growth works. :(

  10. Nicole September 14, 2010 at 6:52 pm - Reply

    @Sean – I was paraphrasing what Kelly said in the forums with that sentence … I don’t know their financials or what their expenses are.

  11. John Alessi September 14, 2010 at 7:39 pm - Reply

    Nicole, you provide a level headed argument for the iStock decision. But the exclusive arrangement with iStock or any other similar agency gives them too much control over your income and livelihood. Just my opinion. I love your work. You are very talented and you are getting better and better! I wish you the best of luck!

  12. Joshua September 15, 2010 at 1:09 am - Reply

    Thanks for your thoughts Nicole. I’m not sure that I agree though. I don’t know all the details but any business with a gross profit greater than 50% (I’m just guessing here) should be doing fine. To me it looks like it’s plain greed.

  13. mystockphoto September 15, 2010 at 3:33 am - Reply

    Nicole,
    I’m not an Economic Mastered Guy, but if a business model is not able to pay (already low) 20% commissions, I mean for the non-exclusive contributors, there’s something wrong – and not in the royalty structure. Otherwise, the reading key of the news is not limited to the unsustainable commissions scheme… iStock wants to be a different company, they want to work with Exclusive Pros and they want to move away from an User-generated content website. I hope that the strong iStockers like you could continue earning as now and much more, but for the amateurs and/or non exclusives there isn’t a good deal there.
    Regards,
    Roberto

  14. […] My Thoughts on the Changes at iStockphoto – Nicolesy by Nicole S. Young […]

  15. Nicole September 15, 2010 at 10:03 am - Reply

    @Joshua – Just because iStock is taking in more than 50% of gross sales doesn’t meant that’s how much it is profiting. They have expenses (lease, equipment, etc.) like any business with regular employees.

  16. Chris Boyd September 15, 2010 at 10:53 am - Reply

    Nicole, I really appreciate your perspective on the changes. I was expecting a heavily opinionated article that burned iStock at the stake but it was a good read with good perspectives.

    Really appreciate the info and the time you spent to provide it!

  17. Tim September 15, 2010 at 5:36 pm - Reply

    I think you’re burying your head in the sand.

    Messages from iStock up until last week were universally positive about how good/successful the business was and how it was growing. Now out of the blue their business model has become ‘unsustainable’ and now they’re taking an up to 85% cut from each sale.

    They’ve taken advantage of the very community that has made them a success. How can you continue to trust them? Shutterstock, while being a smaller player than iStock has managed to increase contributor payouts over the past few years.

    What kind of business pays people less as it grows and becomes more successful? I bet the iStock/Getty execs haven’t been asked to take a paycut if it’s so critical for the company’s survival.

    I think staying exclusive would be a *very* bad idea for you.

  18. Nicole September 15, 2010 at 6:00 pm - Reply

    @Tim – Are you a microstock photographer? Just wondering if you have any actual experience in the industry or if you’re basing your information on what you’ve read elsewhere.

  19. Tim September 15, 2010 at 7:06 pm - Reply

    Yes, I’ve been a Microstock photographer for about 3 years now. I won’t pretend I’m at your level (which is why I read your blog – to get better :-)) but I do have some experience in this industry. I’m a non-exclusive and contribute primarily to 6 agencies. iStock makes up about 40% of my total income. I’ve also been a buyer of photography for about 15 years now, commissioned, RM and RF.

    I admire your loyalty to iStock – it’s loyalty and advocacy like yours that made it a success in the first place – but they’ve just stung you, by your estimation, 12.5% of *your* money and all they’ve been able to offer in justification is a bunch of weasel words on their forums.

  20. Dave R September 16, 2010 at 3:03 am - Reply

    Nicole I do not have the experience in stock photography that you do, but I do have many years in corporate America.

    We photographers are suppliers to Istock and the other stock houses. In corporate America getting your suppliers to cut thier prices by 15% is unheard of.

    Most large businesses succh as Walmart. Kmart and grocery stores have thier profit margins in the singles digits. When I ran a large computer distributor we were happy with a margin in the 15 to 18% range.

    With Getty and iStok now owned by a private equity firm, we will never see a annual report. But I would bet a years paycheck that the top tier of the management there are going to recieve a large bonus for pulling this off.

    If you want to see Getty’s old annual report from years ago and se what kind of profi they were making four years ago read this.

    http://www.docstoc.com/docs/393330/Getty-Images-2006-Annual-Report

    I was wary of micro stock when I first heard of it. Years ago the greatest photographers shot for stock and it was all but impossible to get accpeted by the Image Bank. Now I see photographs that I would not have turned in when I was taking photo 101

  21. Mike C September 17, 2010 at 3:31 pm - Reply

    I have never been more than a photography hobbyist, so I don’t know how much my opinion counts, but I have followed this saga with great interest, and I have even managed to stay caught up on the two monster threads.
    While iStock says that in their estimation 76% of exclusives will NOT see a drop, from what I have seen, exclusives make up in the neighborhood of 10% of the iStock contributor base. 90% WILL see a drop in earnings. People on the forums are furious, as they should be. What they should have done was freeze the canister levels – if you are at 35%, you stay there until you meet the annual target to advance, and if you don’t make it by then end of the year, you stay at 35%, and start over again. The current system is especially harmful to mixed media people, who have no way of maintaining adequate sales without combining the two, which will not happen.
    I get that you have a lot invested in iStock, especially as an exclusive. But, as it turns out now, outside contributors now have crowns, and do not have to meet the minimum requirements for being exclusive. Nor do they have to be exclusive to iStock as there have been quite a few found that have images for sale on other sites. But they still get the higher percentages given to exclusives. And the frustrating thing is, iStock refuses to address the issue. No wonder people are carrying pitchforks.
    iStock PR the last few weeks has been an epic fail. Outside of the issue of whether or not they ‘had’ to take up to 85% of each sale, they are losing buyers, regardless of what the spin is – I think everyone would be in agreement that in the last few weeks iStock has done nothing to draw buyers to the site. They are shooting themselves in the foot, and then reloading. That ultimately will affect you by eroding your future sales, resulting in making it more difficult for you to meet the annual targets – which, judging by iStock’s contempt toward contributors right now, will never be lowered – that means they would have to pay more. And that would be unsustainable. 
    Just my opinion as an outsider looking at all of this.

  22. medialark September 5, 2012 at 2:32 pm - Reply

    I’d really be interested in your feelings about istockphoto and their royalty structure now. It feels to me like they’ve lost a lot of traffic and the sales that go with it.

    I guess their model wasn’t sustainable, but it feels like what they did had made their business less sustainable as well.

    But I wasn’t an exclusive contributor there, so it may be different for me.

    I’d love to hear what you think. Thanks!

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