iStock Video Producers Rebel Over Proposed Vetta Royalty Share

iStockphoto has announced plans to introduce a new higher priced Vetta collection of video clips. But, video producers are rebelling over the proposed royalty split for this product. Clips in this collection will be handpicked for their art direction, conceptual execution and rarity and will be made available at higher prices than other exclusive content. Below are the current prices compared with the proposed new prices.

  Current Vetta
Small Web 20 not offered
Small Web 30 55
Big Web 50 90
HD 720 85 120
HD 1080 95 150

In order to participate in the Vetta collection the videographer must be exclusive with iStock. Exclusive contributors currently receive between 25% and 45% based on the total number of redeemed credits (the price paid to use the videos) in the previous year. The royalty share for clips placed in the Vetta collection will be between 22% and 30%. (See chart below) To qualify for exclusive the videographer must have had at least 250 downloads of his clips.

Redeemed Non-   Vetta/
Credits Exclusive Exclusive Agency
1,250,000 20% 45% 30%
160,000 19% 40% 28%
85,000 18% 35% 26%
40,000 17% 30% 24%
14,500 16% 25% 22%
Default 15% 25% 22%

There are 15 videographers whose clips have been downloaded a total of more than 12,500 times. These people are referred to as “diamond” contributors and are the most experienced clip producers on iStock. 14 of the 15 are exclusive with iStock. Only exclusive contributors are allowed to put images on Vetta. These 14 received a 40% royalty in 2010 and as exclusive contributors most will receive 40% for exclusive sales in 2011. (With the RC targets still in flux it is not clear that all diamonds will be getting 40% for 2011. Some my have possibly dropped to 35%) With the Vetta proposal the royalty rates for diamond contributors would drop to 26% to 28%.

It is estimated that iStock currently has about 39,121 video clips from these diamond contributors. At the moment videographers representing about 34,673, or 89%, of these most in demand video clips have said that they will not allow their work to be licensed through Vetta unless their royalty share remains the same as it is for exclusive sales that are licensed at the lower price.

In addition, as of this writing, a total of 25 contributors with at least 44,727 video files have OPTED OUT of Vetta. Initially when iStock announced Vetta for video the company said nothing about the royalty percentages videographers would receive. Given the higher overall fees for such usages the top videographers assumed they would earn more and initially opted into the program. However, once they were told their royalty percentage were being cut and that they would actually be getting less per sale than if their clips were simply licensed at current prices. they have chosen to OPT OUT of Vetta. Many non-diamonds are also opting out and have voiced their concerns on the forums.

At the present time it is estimated that iStock has about 345,000 clips from an estimated 5,000 contributors. If 13% of its top producing clips are unavailabe for Vetta it would seem to be extremely difficult for the company to argue to its customers that Vetta is a “premium” collection for which customers should pay a higher price. All the best, most in demand clips would be continue to be available at lower prices.

Many videographers on the forums are saying there is absolutely no justification for a reduction in royalty rate. Vetta is just another collection and nothing more. They insist that that their royalty share must remain the same for Vetta as it is for Exclusive.

The numbers make it clear that iStock is trying to exploit its contributors. It wants to charge its customers more, but keep all the extra money as profit for itself and share none of it with its contributors. There are no additional costs to offset. Videographers say that the vast majority of sales are for HD 720. Thus, if they leave their clips in the regular exclusive collection they will get 40% of the 85 credit sale price or 34 credits. If the clip is moved to Vetta, and despite the higher price, the photographer gets 28% of 120 credits or 33.6 credits. iStock keeps ALL the extra revenue generated by the high price.

In addition, based on what has happened on the still side of the business, we can assume that when the price goes up fewer sales will result and the videographer’s gross revenue is almost guaranteed to decline. Since there is no advantage to getting a higher price the best choice for the videographer is to keep the price low and go for volume.

If iStock sticks with these royalty rates, many of their top producers seem prepared to go to other major microstock distributors provided those distributors are willing to give them a better royalty rate. Talks are going on and 50% is being discussed. This could be a great opportunity for one of the other distributors to build a premium video collection.

Another factor for exclusive contributors to consider is how a move to non-exclusive or out of iStock would affect their relationship with Getty Images. Many also have clips on the Getty web site. Will Getty continue to represent those clips if they are no longer represented by iStock?

In such negotiations microstock sellers have some major advantages compared to photographers who license images or clips through traditional distributors. First, it is much easier for the microstock contributors to communicate with each other on forums. In addition the microstock companies provide much more statistical information making it possible for each individual to know who the leading producers are and which images and clips are best sellers. It is also possible to have a rough idea, based on their own sales, of what others might be earning. In addition microstock contracts allow for quick termination if the photographer needs to move in a different direction.

In the macro world, for the most part, distributors have always called the shots when it comes to establishing royalty percentages and the image suppliers have always been left to take-it-or-leave-it. Contributors have never been in a better position to influence a final action than they are in this case.

[Discussion on MicrostockGroup]

About The Author:

Jim Pickerell has been involved in the stock photography business for almost fifty years as a photographer, Macro agency owner, and newsletter editor for the last 20 years. He has lived through the industry changes and is often able to supply useful perspective to those new to the business. Jim publishes www.selling-stock.com, a subscription service and www.photolicensingoptions.com where readers pay to read individual stories. To receive a FREE email every Saturday that includes summaries of the new stories posted the previous week click here, and then click Subscribe to confirm.
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Posted on March 8th, 2011 in Editorial, Microstock News | tags: , ,
  • There’s a misconception that iStock only exploits non-exclusives. Exclusives don’t complain much because until they contribute to other sites, they’re oblivious to what fair treatment really is. It makes me chuckle to hear about them rebelling like this. I wonder how long they can put up with it. As someone who makes so much more on other sites, it blows my mind that anyone is still exclusive.