Fotolia has notified production companies that contribute to its Infinite Collection that in future they will only be paid 40% of sales, instead of the 50% they have been receiving. Independent contributors to the Infinite Collection retain the 50% commission rate.
Fotolia director of communications Jennifer Laraway makes the point that, “In comparison to some of the major stock agencies, Fotolia is still paying out double to agencies at the new rate.” She adds: “Fotolia’s adjustments are part of our strategic global marketing plan, which proved effective throughout 2009. In 2010, we plan to develop new features, increase marketing investments to promote our contributors and content, and continue our aggressive expansion plan. Collectively, these investments and efforts are designed to actually increase contributor return.”
This 20% reduction in revenue has angered most of the contributing agencies and production companies, who are skeptical about the potential of increasing returns. However, the general feeling is that some income is better than nothing, so expect most agencies to leave their images in place and to continue supplying new images to the Infinite Collection.
Generally, producers sell the images represented in the Infinite Collection through many other distribution outlets around the world. In most cases, other companies charge much higher usage fees than Fotolia. Thus, while revenue is expected to be down significantly from one distributor, the producer’s overall revenue should not be seriously affected.
Nevertheless, production companies that supply images to the Infinite Collection make budgetary decisions regarding what they can afford to spend on future productions based on anticipated future revenue. As sales revenue drops, the amount they are willing to invest in future productions is also likely to decline, possibly affecting the quality of the imagery available in the future.
Fotolia raised over $70 million in investment capital in the past year. Still, some suppliers see the commission reduction as an indication that Fotolia’s operating costs are rising faster its sales and the company needs a bigger share of revenue to cover its expenses.