iStockphoto: Calculating Based on Number of Credits vs. Value Disadvantages Some Contributors

Posted on 9/16/2010 by Jim Pickerell | Printable Version | Comments (0)

I asked iStockphoto COO Kelly Thompson why the company choose to base “redeemed credits,” the number that serves as the basis for the new contributor royalties package, on the number of credits downloaded rather than the monetary value of the credits.

When a customer buys a 10-credit image and it comes from a 26-credit package, the value of each credit is $1.52 for a total of $15.20. If the credits happen to come from a 10,000-credit package, then the value of 10 credits would be $9.50. If credits originate from packages that were sold earlier at different price levels, actual value of 10 credits might also be something different.

Then, if a photographer receives a 20% royalty for the 10-credit sale, either $1.90 or $3.04 would be credited to his account. The iStock site states: “Actual royalties are based on net credit value, which varies with purchase.”

The number of credits redeemed is not really an accurate measure of what the photographer earned for iStock. I thought that part of the argument for making this change was to more accurately reward those contributors who generate more revenue for iStock, but that doesn’t necessarily happen with the new system.

Theoretically, it is possible for someone who has 25,001 redeemed credits to earn more money for iStock than someone with 40,000 credits. While this is an extreme example, why did iStock choose to base the “redeemed credits” system on the number of credits rather than the value of the credits, when it would be so easy to do it the other way?

Thompson said: “We actually looked at doing it in pure dollars instead of credits, but the contributors we tested it on found it was more confusing for them.



“I think what you are saying may be true if we only sold a few credit packs. We sell millions and millions of credits, so the average value of a credit is incredibly stable. Because it’s so stable, it’s really [immaterial] which way we do it, as long as we treat everyone the same.”

While it is not surprising that the average value of iStock credits is stable, I would think it might vary greatly from one photographer to the next. The type of work some photographers do is more likely to be used by those who need a lot of larger file sizes. However, in such cases files will be purchased by those who have bought the largest packages of credits at very discounted prices. Many of the people who consistently use the smaller file sizes will buy smaller packages of credits and end up paying a lot more per credit.

With the system iStock has chosen to use, it appears that the photographers who sell lots of pictures to customers that buy big credit packages are getting an unfair advantage over those whose sales are to customers that purchase just a few images a year and buy small credit packages.


Copyright © 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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