408 INDEX REDUCES PHOTOGRAPHERS PERCENTAGE
June 2, 2001
Index Stock Imagery has sent a letter to their photographers asking
that they accept a reduced percentage of sales from 50% to 40% of net
revenues collected on Rights Protected sales.
In exchange Index is offering several incentives which are not totally
offsetting, but reduce the effect of the loss of percentage.
In the future there will be no catalog fees. Print catalogs only
represent about 30% of the total company sales, down from almost 80% of
sales when the current management acquired the company several years
ago. Online sales are not dominant and over 90% of the images are
In the past about 5% of the total monies owed photographers have been
deducted for catalog fees. Thus, on average, this would have made the
photographer's net about 45% of gross revenue collected.
Index will now pay monthly instead of quarterly which should aid
the photographer's cash flow.
Photographers are not the only ones being asked to take a cut. In
the past few months Index cut their staff by 50% and overall operating
costs by almost 50%. All staff have taken pay cuts and bonuses have
been deferred for four months.
Index is also trying to re-adjust the percentages with foreign
agents in those cases where Index is supplying the agent with a digital
database and there is no need for the agent to store film or to mail
expensive print catalogs as a means of promotion. Index has one deal
with an agent who has agreed to take 30% instead of the traditional
40%. In such instanced, under the new 60% for the home agency policy,
the photographer would end up getting 28% of the gross sale instead of
the traditional 30%.
Unfortunately, many of the agencies attending the recent CEPIC
international congress seemed to dislike having their percentage cut as
much as photographers do. But, at least Index is trying to cut costs on
Index is also asking the photographers to let them consider
putting some of their images into RF. Currently, Index has about 5,000
images in RF. They have about 600,000 Rights Protected images online,
but only about 100,000 have ever been licensed. They intend to go
through their entire database and determine if it would be better to
license some of these non-selling images as Royalty Free. At that point
they will contact each photographer and seek approval for specific
images. No images will be put into RF without the photographer's
The photographers will receive 20% of RF sales which seems to have
become an industry standard. In this process they will probably remove
and return some images from the database when they believe the images
are outdated, or redundant to better images in the file.
Through their new brand, Webspice, Index plans to offer a low rez
photo subscription product similar to Gettyworks.com and Corbis'
BizPresenter.com that will be aimed at power point users. Initially
they expect to offer a subscription to about 5,000 images for an annual
fee of $29.95 for personal use and $199.99 for a Premium Level. Users
will receive a maximum file size of 200K for this fee. Photographers
will be paid a proportional share of the total subscription fees based
on the photographer's share of the total images in the "pool".
While no one likes to see their income drop, the reality in the current
market is that costs for everyone are going up and revenue is dropping.
This is not a case of the agency being greedy, but a financial
imperative. Almost $30 million in venture capital has been invested in
Index Stock Imagery and at some point those venture capitalists want to
see some return on their investment, just like photographers want to
see a return on the images they have produced.
Index believes they can make the company profitable by the end of 2001.
If they can't, and the VC's refuse to put in more money, then Index
might be forced to close it's doors. This won't be good for anyone,
including the photographers. 50% of no sales is $0.00.
Index has said that if photographers can not accept the new terms they
will be happy to return the photographer's images. Holding out for a
higher percentage is not likely to force Index to change their
policies. In the current market environment they simply can not afford
to pay more. It should also be recognized that Index has many more
photographers than they need. They can afford to lose a lot of them.
Probably the best option for the photographers is to accept the new
terms in order to keep the images already in the file working. When it
comes to new productions photographers should explore ways of cutting
their production costs. If that is not possible -- and even if it is --
the photographer should also look for other ways to earn revenue such
as assignment photography or something else.