Alamy Sales Commissions

Posted on 2/8/2003 by Jim Pickerell | Printable Version | Comments (0)

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ALAMY SALES COMMISSIONS



February 8, 2003

Alamy is asking photographers to give up an additional percentage of their sales so
Alamy can add distributors to their international sales operation. The combined
Alamy/Distributor commission is 55% of the total revenue collected with 30% going to the
Distributor for local marketing and 25% going to Alamy for operating the site. This
leaves only 45% for the photographer.


Many photographers are concerned about the rapid reduction in photographer share at
Alamy. In Alamy's initial offering two-and-a-half years ago 85% of revenue collected was
slated to go to the photographer. Now, in some cases, it is down to 45%. Photographers
are asking will the reductions in percentage ever end?


In reality, most people in the industry never though Alamy would be able to maintain
their operation on only 15% of sales, despite the company's early assurances. Such
pricing didn't leave anything for local promotion or local customer support in countries
where buyers speak a language other than English and have different local customs.


It appears that Alamy has discovered they need at least 25% of sales to effectively
operate and market their site and show a little profit. They have also learned (as is the
case with many other internet marketing operations) that it is difficult to penetrate a
market without local support. These local distributors need 30% of sales to cover
promotion costs, provide customer support, do research for the customer when necessary
and deal with collections. The resulting 45% to the photographers is close, although
still somewhat better, than what most other agencies take when selling into some of the
smaller countries in the world.


It is important for photographers to understand that currently in excess of 80% of
Alamy's revenue comes from direct sales in the UK and the U.S. The volumes are about
equally split between these two countries. For sales in these countries photographers
will continue to get their higher percentage depending on how they submitted their work.
Alamy has no plans to appoint distributors in these countries.


James West, CEO of Alamy, says, "One of the criteria we use when assessing a potential
distributor is whether their efforts will negatively impact our own direct sales growth.
In markets where we have little or no sales, distributors present a good opportunity to
build revenues in advance of our own marketing efforts."


West also pointed out that in the near future they will be announcing a toll-free number
for U.S. callers (answered in the UK) and extending their opening hours for US customers.


West continued, "In markets where we have a strong and growing customer base we would
only consider appointing distributors whose customers are in the main not likely to
purchase from Alamy. This could be due to force of habit (customers may be loyal to one
agency for example), or because the customers are offered a service that is not available
from other agencies. While we expect that the overwhelming majority of our revenues from
the US and UK will continue to come from direct sales, we also feel that some
distributors might help us reach pockets of customers who would otherwise remain elusive.
At present, our focus for these regions remains on direct sales and we haven't spoken to
any potential distributors about working with us.


"The jury is still out on how effective the distribution scheme will be. As a company we
view it as a nice extra to offer our contributors, but we also strongly believe that
Alamy has a lot of potential to fulfil direct sales worldwide. Alamy was developed as a
medium through which photographers and picture agencies can test their images on the
market. The distribution scheme is an optional project. Those who choose to use the
distribution scheme can widen the exposure for their images in markets or customer groups
where they might otherwise have little visibility." he continued.


It is also important to note that distributors do not have exclusive rights to a
territory and can only get commissions for sales when they invoice the customer. If a
customer from the distributor's territory searches for images on the Alamy site and pays
by credit card that becomes a direct Alamy sale. In such cases the distributor gets no
percentage. Alamy can also appoint more than one distributor in a given territory


The software that enables distributors to search, input sales, and download images will
be completed in February 2003. Once that is in place distributors will be able to process
sales and Alamy contributors will be able to track sales made by distributors online.


Editors note: In the opinion of Selling Stock it appears that Alamy may now have
its royalty splits at a level that is sustainable.


Copyright © 2003 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

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