Given recent questions concerning Photolibrary/Indexstock bookkeeping issues, it's worth exploring some problems that can arise when a agency like Indexstock keeps sloppy books.
In 1989, a group of photographers suspected Uniphoto, a Washington, D.C. agency, of not paying photographers in full. Regular payments to top producers had become less frequent. Photographers only got paid when they called and specifically asked for a statement. A few major suppliers banded together and forced the owners to make records available in order to reconcile royalty payments with gross revenue received. I was charged with supervising this effort.
The first thing we did was look at gross revenue the agency received the previous quarter, and compare that with gross royalties paid. The agency was taking in about $250,000 a quarter and the combined total they were paying out to all their photographers was less than $50,000, even though photographers were supposed to be getting 50% commissions.
There were unreliable computer records that didn't always match paper invoices. Upon examining the paper records, we found invoices missing for over $50,000 in cash receipts. In some cases, art directors who worked on the projects were gone and tracking images was impossible. Some of the invoices had descriptions of usage like "five images for brochure atÂ $250 each." There was no itemization of images ownership. Thus, it seems unlikely any photographer received a royalty. Record keeping was often sloppy, descriptions were poor, a photographer's name was missing. As a result, gross revenue from these invoices went into the agency's pocket.
The sales staff earned commissions based on the gross invoices sent out in a month, regardless of when they were paid. Thus, once the invoice was out the door, there was little incentive to follow up and make sure photographers were paid.
I had two people working two months on this project. They examined 12 months of paper invoice records. A quarter was ending when we finished our examination. We determined that Uniphoto had sales of about $250,000 in the quarter and would owe the photographers about $125,000. The company had $25,000 in the bank and owed Â employees about $20,000 for the two-week period about to end.
I asked the CEO how he managed to get by without paying anybody. He said, "Everybody thinks it was just a bad quarter for them. If they call, then I pay them about what they got the previous quarter (regardless of what they are really owed) and that keeps them happy." Take note: the agency was doing lots of marketing, and the CEO was driving a Porsche so it looked successful. Every photographer thought it was just his/her images that weren't selling.
At this point, photographers forced the sale of Uniphoto to Pictor. Based on the one-year records we developed, Pictor offered a plan to repay in monthly installments over a two-year period.. No one determined what hadn't been paid for the previous years. Pictor met their obligation and then, it is believed, paid photographers as badly as Uniphoto. Pictor later went into bankruptcy and was absorbed by ImageState, which has been absorbed by Heritage Partners.
So Why This Story Now?
I have no images with IndexStock or Photolibrary, but based on conversations with photographers and information publicly available, I think a lot of what happened at Uniphoto was also happening at the old IndexStock before Photolibrary took over. Photolibrary has a big mess to straighten out, but it is my impression the owners are honest, ethical and doing as good a job as anyone could expect.