As we near the end of 2012, I’ve just received a copy of Alamy’s financial statement for 2011 that was filed with
Companies House in the UK in August of this year. In 2011 Alamy’s gross turnover was £14,853,670 (about $22,913,400). This was up $1,042,600 (about 4.8%) from $21,870,800 in 2010. However,
2009 revenue was $22,864,000 so in 2011 they were barely able to climb back from 2010's lost sales.
During 2011 they paid out $14,395,000 (about 64% of total revenue) in royalties to contributors. After all costs of doing business and taxes were deducted the company’s profit for the year was $698,770 (about 3% of total revenue).
| |
2010 pounds |
2010 dollars |
2011 pounds |
2011 dollars |
| Turnover (Gross Sales) |
£14,139,495 |
$21,870,800 |
£14,853,670 |
$22,913,400 |
| |
|
|
|
|
| Cost of Sales |
|
|
|
|
| Royalty Payments |
£9,058,494 |
$14,011,600 |
£9,331,597 |
$14,395,000 |
| Operating expenses |
|
|
|
|
| and taxes |
£4,864,977 |
|
£5,069,094 |
|
| |
|
|
|
|
| Profit |
£216,024 |
$334,144 |
£452,979 |
$698,770 |
| |
|
|
|
|
| Profit % gross |
|
1.5% |
|
3% |
| Profit % royalty |
|
2.4% |
|
4.8% |
While this is certainly moving in the right direction it is worth taking a
look back to 2008 to see where things were then. Revenues in 2008 were $31.2 million. They peaked in the second quarter of 2008 with total revenues for that quarter of $8.53 million. Thus, 2011 revenues were still 27% less than those in 2008.
Another thing that’s clear is that additional images don’t necessarily generate additional revenue. At the end of 2008 Alamy had 14.28 million images on its site. By the end of 2011 that number had jumped to 27.1 million. Today, they have 33.98 million images a 130% increase over 2008. We don’t know how much sales have grown in 2012, but it is hard to imagine that it is much more than 5% over the 2011 figures.
In 2008 77% of Alamy’s revenue came from editorial sales. No similar figure was provided in the 2011 report, but there is no reason to believe that has changed substantially.
Sales Distribution
The 2011 financial report also supplied figures on areas of the world where sales were generated. They were as follows:
36.8% in the UK
36.2% in United States
13.1% in Europe
13.9% in Rest of the World
Back in 2008 Alamy broke down these figures by currency. 51.4% of the revenue was in English pounds, 34.3% in U.S. dollars and 14,2% in Euros. It was pointed out at the time that most of the non-UK or Europeans countries transacted their business using U.S. dollars. Thus, U.S. dollar sales in 2008 is probably comparable to U.S. and Rest of the World sales in 2011, or 50.1% of the total.
In the past couple of years Alamy has made a point about how much they have grown sales in the U.S. as a result of establishing a sales organization here. But, meanwhile sales in the UK, their home base, have dropped substantially, not only in terms of revenue generated, but as a percentage of total sales. Revenue generated in 2008 from UK sales was $16,038,000. In 2011 it was $8,432,131, just over half of what it was in 2008.
Lower Royalties
In the last couple of weeks Alamy contributors have been complaining about Alamy’s move to lower royalties beginning in 2013. Alamy’s argues that this move is necessary in order to expand its marketing in Europe and the rest of the world. While U.S. sales are still lower than they were in 2008, clearly the increased U.S. marketing effort have had some effect in stemming the tide of falling revenue since that time.
Many contributors are bothered by the fact that since 2006 Alamy has invested 89% of the profits of the company in medical research. They believe “profits” should be returned to contributors in terms of higher royalties, rather than lowering royalties.
A little history is in order. Alamy was co-founded in 1999 by James West and his uncle Mike Fischer. Formerly, Fischer was co-founder and CEO of RM Plc, the leading provider of IT solutions to UK schools, colleges and universities. He also founded the Fischer Family Trust that runs projects in health and education. Given his IT background he was the lead developer of Alamy’s technology.
Fischer is Alamy’s Chairman of the Board and controlling stockholder. It is my understanding that he put up the initial capital to start the company. It seems likely that part of the financial arrangement for this very risky investment of capital in 1999 was that, if and when the business became profitable, most of the profits would be used to support the work of the
Fischer Family Trust. The FFT funds research into a number of health, educational, maritime and conservation projects.
The Alamy profits have been handed over to the Trust have provided the bulk of the funding for
Systems Biology Laboratory, a not for profit community interest company. SBL operates out of the same building where Alamy is headquartered and is dedicated to improving patient treatment options through high quality, collaborative and clinically focused research. Its team works on cancer immunotherapy and DNA damage in neurons.
West and Fischer are the only directors. In 2011 their total combined remuneration from Alamy was about $570,000 with one of them receiving about $385,000.