iStock Unification: What’s It Mean For Contributors?

Posted on 11/8/2016 by Jim Pickerell | Printable Version | Comments (0)

With Getty’s announcement in late October of the Unification Timeline that is due to take effect January 3, 2017 most iStock contributors have focused on the fact that the minimum guaranteed royalty for a subscription download will be $0.02.

Instead of crediting a fixed amount to the photographer’s account at the moment an image is downloaded, Getty has decided to pay a proportional share of the actual money paid for the subscription based on the actual number of images download via a subscription.

iStock offers monthly subscription packages that allows the download of 10, 25, 50, 100 and 250 images and yearly packages for 50, 100 and 750 images per month. It is generally believed that some customers don’t download all the images they are entitled to download. For example: someone who purchases a 50 image package on an annual basis may only need 35 images one month; the next month they are on vacation and only use 18; the following month they use 46 and the month after that they need 66.



Their contract allows rollover of unused downloads so in the month when they need 66 they may be able to make use, at no additional cost, of some of the unused downloads from previous months.

Getty says, “The more detailed reporting requires more time to process, so royalty earnings will no longer be updated in real time but will instead be published via a royalty statement on the 20th of each month following the month the earnings were made (except royalties payable on subscription downloads, which shall be paid in the month following the end of the applicable subscription term).”
    With the use of the phrase “applicable subscription term,” it is unclear whether yearly subscription sales will only be calculated once a year after all rollover uses have been taken into account.
Getty has also said, "Up to 250 unused downloads can be rolled over month to month for annual subscriptions or any other auto-renewed subscriptions. If you don't auto-renew your subscription, you will lose any unused downloads when your subscription term ends (including accrued rollover downloads, if any)."



Subscription Packages


iStock has 16 different subscription packages. Eight of them only allow customers to use non-exclusive images in the collection. Another higher priced 8 allow the customer to use any image in the collection regardless of whether it is exclusive or non-exclusive. Non-exclusive contributors will receive a 15% royalty and exclusive will receive a 20% royalty.

Non-Exclusive Image Package Value   100% 75% 50%
Images Only Package Fee Per Image   Royalty Royalty Royalty
"Essentials"   Fee All Used   Per Image Per Image Per Image
               
1 Month 10 $40 $4   $0.60 $0.80 $1.20
1 Month 25 $65 $2.60   $0.39 $0.52 $0.78
1 Month 50 $99 $1.98   $0.30 $0.40 $0.59
1 Month 100 $149 $1.49   $0.22 $0.30 $0.45
1 Month 250 $199 $0.80   $0.12 $0.16 $0.24
               
1 Year 50 $90 $1.80   $0.27 $0.36 $0.54
1 Year 100 $129 $1.29   $0.19 $0.26 $0.39
1 Year 750 $166.58 $0.22   $0.03 $0.04 $0.07
               
All Images - Exclusive              
& Non-Exclusive              
"Signature"              
1 Month 10 $99 $9.90   $1.98 $2.64 $2.97
1 Month 25 $149 $5.96   $1.19 $1.59 $0.18
1 Month 50 $229 $4.58   $0.92 $1.22 $1.37
1 Month 100 $299 $2.99   $0.60 $0.80 $0.90
1 Month 250 $399 $1.60   $0.32 $0.43 $0.48
               
1 Year 50 $199 $3.98   $0.80 $1.06 $1.19
1 Year 100 $259 $2.59   $0.52 $0.69 $0.78
1 Year 750 $333.25 $0.44   $0.09 $0.12 $0.13



Let me look more closely at the 50 image packages.

We know that if 50 images are used in a month each image in the non-exclusive only package is worth $1.80 and each image in the package that allows both exclusive and non-exclusive images is worth $3.98.

The royalty share for a non-exclusive contributor is $0.27 and for an exclusive contributor is $0.80. However, if a non-exclusive contributor images is downloaded by a customer who has purchased an All Images package then that image is worth a $0.60 royalty.
 
  Total Cost Value if Royalty
    50 Used  
Non-Exclusive Images Only $90 $1.80 $0.27
All Images - Non-Exclusive Contributor     $0.60
All Images - Exclusive Contributor $199 $3.98 $0.80

But let’s assume most subscription customers are not downloading all the images allowed in order to reach their maximum allowable number, but are only downloading those that can benefit them in some way for the projects they are currently working on. Taking my hypothetical case above, we get the following possible royalties for the 35, 18, 46 and 66 images downloads from a 50 image package.

  50 Images 35 Images 18 Images 46 Images 66 Images
  Used Used Used Used Used
Non-Exclusive Images Only $0.27 $0.39 $0.75 $0.29 $0.20
All Images - Non-Exclusive Contributor $0.60 $0.85 $1.66 $0.65 $0.45
All Images - Exclusive Contributor $0.80 $1.14 $2.21 $0.87 $0.60

Where it really gets interesting is in the months where the customer starts using some of the rollover images. In the fourth month in the example, where will those other 16 images come from? Will iStock really pay all the image creators whose images were use in that month less? Or will they pay the minimum to the first 50 whose images were used and then apply the other 16 to one of the earlier months? If that is the case, the 16 applied to earlier months might earn more.

If they apply the 16 to one or more of the earlier months, then they will have to re-calculate the amounts paid all the contributors who received an earlier royalty payment from a sale to that particular user and deduct over payments from the contributor’s future royalties.

If they wait until the end of the year to do the calculations then all contributors would be paid an equal share of the total revenue generated based on the total number of images downloaded during the year, but that is a long time for contributors to wait to receive any royalties for the use of their work.

The likely number of possible calculations of this type is mind boggling. While, in theory computers can handle such complex calculations, given iStock’s long track record of miscalculating royalty amounts few contributors seem confident that this system will function smoothly.

Consequently, contributors may never be sure that the subscription royalties they receive are an accurate and true count of what they have actually earned.

Do Customers Download All They Are Allowed?


Some contributors believe that customers will eventually download all the images they are allowed as part of their subscription. If this is the case, then all contributors will eventually earn is the minimum royalty per-image-downloaded. However, this may not be the case.

Unfortunately, we have no idea how many images iStock customers actually download or the number they are entitled to download based on what they are paying for their subscriptions.  

However, we do have some information from Shutterstock that may give us some a broad guidelines as to what may be happening. Earlier this year, I estimated that in 2015 Shutterstock earned about $166,600,000 from subscription licensing, and that they had about 133,380,000 subscription downloads (90% of all the downloads they reported). If we divide the approximate annual payment for a subscription into their revenue number that would mean that they had somewhere in the range of 76,000 subscribers. Further estimating that about half the subscribers choose the 350 image-per-month plans while the rest chose 750 per-month subscribers could have potentially downloaded over 500,000,000 images.

If all of them chose the 350 image per-month plan they still could have downloaded 320,000,000 images. Thus, on average, they only downloaded 26% to 41% of the images their plans allow. I suspect iStock’s experience is similar, although iStock does have more pricing options than Shutterstock, enabling customers to choose plans that are more closely tailored to their specific needs. As a result, iStock customers may download a higher percentage of the images they are allowed to download.

If subscribers download 50% or less of the images they are allowed to download then contributors could earn significantly more than the minimum possible royalties, but it is impossible to estimate how much more until we begin seeing some results. One thing is sure, virtually every royalty reported is likely to be different. There is unlikely to be much consistency at all.


Copyright © 2016 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 301-461-7627, 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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