Photolibrary Responds to Recent Reports

Posted on 12/17/2007 by Jim Pickerell | Printable Version | Comments (0)

In an attempt to relieve Indexstock (IS) photographer anxieties, Photolibrary Group (PL) has made public details regarding payments of outstanding pre-acquisition royalties and the ongoing reliability of PL's accounting system.

Questions were raised recently when Carlos Santos, then controller of Photolibrary's operations in New York, sent an unauthorized memo to photographers (published in PDN) that indicated monies owed photographers had not been paid. The memo recommended that photographers contact PL's headquarters in Australia.

Photolibrary's chairman,Tim Moore pointed out that since the acquisition of IS in November 2006, PL has funded IS in the amount of $3,736,152, the vast majority of which was used to pay contributor royalties incurred before PL acquired the company.

Following the acquisition, PL faced additional issues resulting from the inherited accounting system, which had not been audited for at least seven years. In addition, IS had entered into a myriad of low-value-per-unit transactions, the complexity of which contributed to the accounting challenges, particularly in the manual environment used by IS.

Photolibrary hired the international accounting firm KPMG to review the IS records. That review was completed to the extent possible in April 2007. However, KPMG did not complete a transactional-based audit, due to the inadequacy of IS's manual record-keeping process.

The KPMG report said, "The lack of an integrated accounting system requires manual inputs and increases the time necessary to prepare valuable information in a reasonable amount of time. In addition, manual account reconciliations are often needed as balances from different sources/systems do not reconcile. These issues adversely impact the reliability of data prepared by the company with identified examples as follows:

- Royalty payables per general ledger did not agree to the ageing schedule

- Accounts payable per general ledger did not reconcile to the ageing schedule,             - Key documents, such as invoices, loan agreements, contracts with customers and agreements with artists were not always available... or had expired."

Upon receiving this analysis, PL began the arduous process of reconciling the IS records. That process is ongoing.

The Santo memo raised the issue of unmatched image numbers. Moore points out, "Like all large libraries, we do, on occasion, have mismatching of image numbers to those supplied to us by our overseas agents. These amounts are minor and are followed through by our International team. To put this issue into context, in the case of one of our agents, of net revenue to Photolibrary of $156,906.35 for the third quarter of 2007, only $597.50 have unmatched image numbers for verification and payment."

Since the Santos memo was distributed, many PL contributors have requested immediate payment. PL had previously advised contributors that small payments would be batched and paid when they reached $250, due to the losses in bank transaction fees the contributor would incur from a number of smaller checks. Moore said, "Of the individual contributor responses received to date, following the recent press coverage, the large majority are for amounts less than the $250 threshold or have already been paid in full."

One of the issues raised as a result of the Santos memo was whether PL had written off royalties in IS's books. The company's emphatic answer is, "No. It is a matter of fact that no contributor royalties have been removed from the accounts nor have documents been destroyed."

However, Photolibrary's U.S. subsidiary, PL Inc., will replace IS as the operating entity and future royalties will be moved from IS to PL Inc.  Photolibrary believes contributors should view this as a plus, since PL's systems are well established, robust, multi currency and used internationally through its office network in 10 countries. This migration should be completed over the next several months.

PL also pointed out that until all past records can be reconciled, the company can not be sure of exactly what is owed every photographer. Based on what has been learned so far, they estimate that of all the contributor royalties that may be outstanding, nearly 40% will be owed less than $250. An additional problem making it difficult to properly pay all contributors is that IS does not have email or correct postal addresses for over 25% of photographers whose images are in the system.

Moore added, "It should be noted that all of the outstanding royalty issues concern only Indexstock and have no relationship to Photolibrary's present and future business policies and practices. Photolibrary did not create this problem, but is using its best efforts to remedy the past."

Copyright © 2007 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 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, 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:  


Be the first to comment below.

Post Comment

You must log in to post comments.

Stay Connected

Sign up to receive our FREE weekly email listing new stories posted.

Follow Us

Free Stuff

Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More
Finding The Right Image
Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
Read More
Where Is The Stock Photo Industry Headed?
For new readers, or those who may have missed some of what I have written over the last few months, the following are a list of stories worth looking at to get a sense of where the industry is headed.
Read More
Photography As A Career
It’s that time of year when high school seniors are waiting for college acceptance letters and thinking about future careers. If you know someone who is thinking about photography as a career you mig...
Read More
2014 Stories You May Have Missed
For many the end of the year is a time to review past experiences and consider whether it makes sense to chart a new course in the year ahead. Stock photography has changed dramatically for professio...
Read More
More Stories In 2014 You May Have Missed
Every so often I put together a list of the most important stories we’ve published in the recent past. If you are engaged in the business of stock photography the links below are to stories that we’v...
Read More
Getty: A Three Month Review
In all the excitement about 35 million FREE images it is worth looking back at some of things that have been happening at Getty Images in the last three months. After watching revenue decline for the...
Read More
State Of Stock Photo Industry: 2013
If you’re looking for an overview of the state of the stock photo industry as of October 2013 the stories listed below are a good place to start. Regular readers of Selling-Stock will have seen all t...
Read More
Education Market Shifts To Digital
If supplying pictures for educational use is a significant part of your business plan you need to be aware of how the market is trending toward digital delivery and how that is likely to affect the p...
Read More

More from Free Stuff