Digital Railroad: Photographer Royalties Received Will Not Be Paid

Posted on 11/6/2008 by Julia Dudnik Stern | Printable Version | Comments (1)

The Stock Artists Alliance, which has been endeavoring to help photographers collect commissions on sales made through the now-defunct Digital Railroad, has announced that photographers should not expect to receive their share of payments already collected by the bankrupt agency. In an email to SAA membership, executive director Betsy Reid said this information comes from Diablo Management, the liquidation specialist handing the disposition of Digital Railroad assets.

According to Diablo, all monies received by Digital Railroad prior to its dissolution are now the property of the senior secured creditor—presumably the bank that foreclosed on Digital Railroad’s technology infrastructure. Since Digital Railroad lacks the cash to satisfy all creditor claims, many of its bills—such as moneys owed to hosting services, photographers and others—will not be paid.

Though somewhat expected by those familiar with bankruptcy proceedings, this is not welcome news to photographers, some of whom are owed commissions on sales made as far back as last year. It also underscores questionable management decisions at Digital Railroad: while it was still a functioning business, it apparently used image-licensing revenues to postpone running out of cash. The majority of such revenue belonged to photographers using the Marketplace: the image owner’s cut of each sale’s proceeds was 70% to 80%, depending on whether a photographer signed its agreement with Digital Railroad prior to its early 2008 increase of its share of revenues.

The status of pre-paid Digital Railroad service fees, which in some cases were several hundred dollars for a full year of archive use, is similarly bleak. SAA is encouraging photographers who have used credit cards to dispute past charges and alert their credit card companies not to process any future payments to Digital Railroad.

Still, Reid offers a small hope to those who licensed images through the Marketplace very recently. Diablo has reportedly made the commitment to SAA, in writing, that it will work, with the assistance of photographer associations, to collect moneys owed by image buyers and get photographers paid.

Digital Railroad creditors can expect a financial status report to be issued within a month or so. Diablo is also asking photographers involved to submit, by Dec. 1, a written statement for unpaid amounts due from Digital Railroad to: Digital Railroad, Inc, c/o Diablo Management Group, 1452 N. Vasco Road, #301, Livermore, CA 94551.

There has been no further news regarding the potential purchase of Digital Railroad assets by the undisclosed buyer—presumably Newscom—that has supplied its letter of intent to Diablo.

In the meantime, companies like PhotoShelter and liveBooks continue to benefit from the influx of new customers, and others are launching offers targeting the former Digital Railroad user. Latest newcomer is Italian provider MomaPIX, which is offering discounts and emergency FTP access.

Copyright © 2008 Julia Dudnik Stern. 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


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