Stock Artists Alliance (SAA) continues to seek "accountability" from Photolibrary in the Index Stock situation and says in a press release, "Recent revelations and accusations leave the SAA Board greatly concerned about whether Photolibrary has met its contractual obligation to pay Index Stock contributors all past obligations."
The SAA places great weight on the fact that $2.2 million is owed and the organization wants it paid immediately. As far as I can tell, no one is denying the amount and even the Santos letter said, "Photolibrary will soon come up with a payment plan."
The SAA also says that according to photographer statements "outstanding commissions due are from as far back as January 2001."
Based on available information, here's what I think happened. When Photolibrary took over Index Stock, they made a pledge to immediately pay "for all sales made by Index Stock in the last six months and to pay according to contract going forward from November 1st when they took over." They have complied with this promise.
Based on my experience in the Uniphoto audit, I am amazed they have been able to substantiate records that far back in such a short period of time. Photolibrary is making every effort to determine what photographers are owed and properly compensate them.
The first step in figuring out what was owed was to bring KPMG in to do an "intensive audit". But KPMG concluded that a detailed audit was impossible to accomplish "in a reasonable amount of time" due to the "lack of an integrated accounting system". Thus, my guess is Photolibrary was faced with either using KPMG at $300 or $400 per hour to do manual inputs to reconcile the books or to use staff accountants at $50 per hour. In any event, it looks like Photolibrary staff found the $2.2 million owed.
It appears Photolibrary believes it now has the books in pretty good shape going back to January 2001. Now they are moving to make payments. This is not a cash-rich company. They have already paid out $3.73 million and owe at least $2.2 million more. My bet is this is much more than they expected Index Stock to cost when it took over the company. The debt is much greater than anticipated. I doubt they have $2.2 million sitting in their checking account for such outlays. I would be greatly surprised if there is more than $1 million in total profit per-year from the Index division after they pay royalties, salaries and overhead.
PL is trying to devise a payment plan. It can't really afford to pay it all in one lump sum. It needs to find a fair way to stretch payments out over a period of time.
Photographers have a couple of choices. They can yell and scream. Insist on immediate payment and distract the Photolibrary staff from getting on with business. Or they can give the company a little time to propose a workable payment plan for them and determine if it is acceptable. Give the company till the end of 1Q '08.
It is also interesting that the SAA expected immediate payment of the $2.2 million as soon as the statements were generated. The organization was more than happy to wait four months to be paid after they receive statements from Getty.
The SAA is also justifiably concerned about Index Stock commissions that have not been processed after July 2007, due to the transition to the new Australian IMS system. This problem, outlined in the Santos letter, needs to be addressed, but it is not surprising that such problems arise when there is a transition from one accounting system to another. I would remind SAA members of the problems with Getty's accounting system in 2001 and 2002 as TIB and VCG were being integrated.
Uniphoto audit,:Â http://www.selling-stock.com/?p=2348
in a reasonable amount of time:Â Â http://www.selling-stock.com/?p=2343
Santos letter:Â Â http://www.pdnpulse.com/2007/11/letter-to-stock.html