Fotolia, Credits and Commissions – what’s all the fuss about?

If you have been following the microstock industry the past week, this will be old news.  If not – this should get you up to speed.  There has been a lot of discussion both on the MicrostockGroup forum as well as the Fotolia forum about credit prices on Fotolia.

MicrostockGroup Threads: first here, then here, and here, etc etc
Fotolia Threads : first here, then here

So what is all the fuss about?

Commission Pricing

Fotolia recently updated their pricing structure to charge $1.20 / credit for the most expensive credit packages, with other currencies also being respectively updated.   When the buyer makes a purchase with those credits, the photographer is given a % of the credits spent and not the purchase price.  So if the buyer purchases 10 credits for $12.00, then buys a photo for 10 credits (spending his $12.00 worth of credits); a white ranked photographer whose commission level is 25% will earn $2.50 (10 credits * 25%), as apposed to $3.00 ($12.00 * 25%).  This essentially gives the photographer a 21% cut of the sale instead of the 25% described in the contract.

In Fotolia’s defense, they also offer credit packages for $0.75/credit, yet still pay the photographer commissions on a full credit.  Whether the photographer is getting a good or bad deal depends on which packages Fotolia sells most of.

Exchange Rates

As if the pricing confusion wasn’t enough, the whole issue has raised an old sore spot many photographers have had with the way Fotolia handles currencies.  Depending on when and where you first signed up as a photographer, you were assigned a currency which your account is associated with.  Photographers earn ‘credits’ on the Fotolia site, then when requesting payout convert those credits to cash.  Fotolia’s ‘exchange rate’ is currently 1 Credit = 1 USD = 1 Euro = .75 GBP. For those photographers who are lucky enough to have signed up with the Euro currency, they are currently earning 37% (1 Euro = 1.36562 USD, Feb 8 2010) more than photographers with a USD Fotolia account.

In terms of image sales; if a buyer purchases credits with Euro, then spends them licensing a photographers images who gets paid in USD, a white ranked photographer could earn as little as 16% of the actual credit sale price.  On the flip side if the photographer gets paid in Euro and the buyer pays in USD and purchases the largest package, Fotolia pays out a 46% commission. (see table below)

Given these variables there is quite a large variance in the actual commissions photographers are getting for each sale.

Below are two tables.  The first table assumes the photographer gets paid in USD and is a white level photographer.  The table gives the commission levels from buyers paying in three different currencies and buying either the most or least expensive packages.  The second table is the same as the first table except the photographer is paid out in Euro.  Currency exchange rates were calculated 5 Feb 2010.

White ranked photographer paid in USD

Cost/Credit
(local
currency)
Cost/Credit
(USD)
Photographers
earnings/credit
Photographers
% of sale
Advertised
Commission
+/- variance
21 Credits (USD) $ 1.14 $ 1.14 $ 0.25 22% 25% -12%
21 Credits (EUR) € 1.14 $ 1.58 $ 0.25 16% 25% -35%
21 Credits (GBP) £ 0.95 $ 1.51 $ 0.25 17% 25% -32%
3200 Credits (USD) $ 0.75 $ 0.75 $ 0.25 33% 25% +32%
3200 Credits (EUR) € 0.75 $ 1.04 $ 0.25 24% 25% -4%
3200 Credits (GBP) £ 0.63 $ 1.00 $ 0.25 25% 25% 0%

White ranked photographer paid in Euro

Cost/Credit
(local currency)
Cost/Credit
(EUR)
Photographers
earnings/credit
Photographers
% of sale
Advertised
Commission
+/- variance
21 Credits (USD) $ 1.14 € 0.82 € 0.25 30% 25% +20%
21 Credits (EUR) € 1.14 € 1.14 € 0.25 22% 25% -12%
21 Credits (GBP) £ 0.95 € 1.09 € 0.25 23% 25% -8%
3200 Credits (USD) $ 0.75 € 0.54 € 0.25 46% 25% +84%
3200 Credits (EUR) € 0.75 € 0.75 € 0.25 33% 25% +32%
3200 Credits (GBP) £ 0.63 € 0.72 € 0.25 35% 25% +40%

It is pretty clear that having photographers paid in Euro is costing Fotolia a lot more than photographers paid in USD.   What commissions Fotolia is actually paying out is almost impossible to know.  Alexa claims 63% of Fotolia’s traffic heads to the German site with another 6.3% heading to Fotolia France.  Using these numbers we could assume the majority of Fotolia’s buyers are from Europe and are paying in Euro while the majority of photographers appear to be paid in USD.

How other sites deal with the problem

All microstock sites have credit packages which sell at different prices – so how to they deal with the problem?  The most common method, used by both Dreamstime and iStock for example, gives photographers a % of the actual price of the credit.  This method may be more complicated when first looking at your earnings report but provides a more transparent commission structure, which if nothing else keeps photographers happy.

Lastly, photographers seem to be upset due to a lack of response from Fotolia.  Fotolia has not made an official comment on the situation, save a small post from Chad on their forum.

Good evening everyone,

On behalf of the Fotolia team, I want to thank each of you for your patience and support while we roll-out new purchase incentives and commission structures. Rest assured, our payout averages continue to be amongst the highest in the industry. Fotolia understands and appreciates the investment contributors make in creating their material. We welcome and value your feedback. Should you have questions about Fotolia’s new program, please contact Customer Service directly and we would be happy to chat with you.

Fotolia Management

About The Author:

Tyler Olson works as a microstock photographer who also runs the MicrostockGroup forum and blog. Being so closely involved in the microstock community as a submitter, forum moderator and blogger, Tyler is able to keep updated in the constantly changing microstock marketplace.
http://www.simplefoto.com
Posted on February 8th, 2010 in Microstock News | tags: , , ,