Another VCG Update

VCG is still offline in China and there is no clear indication when they may be able to resume operations.

It appears that VCG’s standard prices have ranged from tens to thousands of yuan. Thus, they could be as low $5 to $10 for the use of an image. Such prices seem to fit with the gross sales prices Getty Images has been reporting, minus a reasonable share for the selling agency. We also know that in a very few cases customers have paid well over $600 to use an image. However, It is unclear what the usage conditions have been for the extremely low prices or anything in between. Maybe VCG’s standard price packages have been very similar to those of Shutterstock or Adobe Stock. We don’t know.

It also seems clear that VCG has been doing a lot of tracking of unauthorized uses. A major part of their business may have been to find unauthorized uses rather than just wait for those interested in buying images to come to their site. When they find an unauthorized user they quote a “very high” price for the use. Then they suggest that the user buy a “picture cooperation package” for future uses. These tend to be at much higher prices per-picture-used than VCG’s normal usage prices. But, if the customer buys a package, then the picture that was infringed will be included in the package and the customer avoids the much higher charge for the unauthorized use.



It is unclear what the prices of these packages have been (they may be adjusted in the future), but it has been suggested that the annual prices ranged from 100K to 1 million RMB ($15,000 to $150,000). Again, it is unclear how many downloads the customer would be allowed for these annual prices.

It is worth pointing out that a Shutterstock customer can get 750 images per month for $2,388 annually. If the customer needs as few as 10 images a month they could get a contract for as little as $348 per year. If the cheapest “picture cooperation package” at VCG is $15,000 that is a huge difference from what competitors are offering.



We have no idea how many of these “picture cooperation packages” have been sold, but considering the volume of complaints on Weibo (http://www.selling-stock.com/Article/vcgs-problems-continue ) on April 12th there must have been quite a few.

Another big question arises. If VCG is licensing a lot its uses through these “picture cooperation packages,” are they sharing the high revenue per-image with contributors in general and particularly Getty and Getty’s contributors? Based on the “gross sales” Getty has been reporting, it doesn’t seem likely that many, if any, sales are being made at such high prices.

It seems possible that VCG has decided that much of the revenue resulting from “picture cooperation packages” is a result of the research and expense they have had to incur in order to locate the unauthorized uses. Suppose, for example, that the cheapest package is $15,000, but VCG decides that $12,000 of that is “overhead expense in locating unauthorized uses,” and only $3,000 is for the pictures actually being supplied. If the customer is allowed to download 350 pictures during the year (one of them being the infringed picture) each picture is actually only worth only $8.57. Then they pay Getty a share of the $8.57 for each image downloaded and Getty pays the contributor a royalty based on what it receives. This strategy would tend to support the sales figures that are being reported by Getty.



Since the infringed picture was what started the whole process, does the photographer who created that image get a higher share of the “picture cooperation package” price, or is the value of his picture calculated in the same way as every other picture?

We do know that on April 18, Tianjin Internet information office issued a notice on the punishment of Hanhua Yimei (Tianjin) Co., Ltd., a subsidiary of VCG. Hanhua Yimei (Tianjin) Image Technology Co., Ltd. that said through the operation "Vision China" website (domain name: www.vcg.com) is engaged in the Internet information service process, the release of information to users did not fulfill the duty of safety management, not timely detection and treatment of users are prohibited by laws and administrative rules and regulations issued by the post or transfer content, in violation of the network security law of the People's Republic of China. Therefor, it is decided to impose an administrative penalty of 300,000 yuan ($45,000) on Hanhua Yimei (Tianjin) Co., Ltd.