istockphoto.com: "Bringing the price down to a level where everybody can afford to buy a stock photo"

There are still predictions of some people - even from inside the Stock Photo Industry - that what happened to the Music (Napster et.al.) and Film Industry (P2P) somehow finally will occur in the Stock Photo Industry (see the last paragraphs of this posting). From our POV this is obviously pure nonsense as you can not compare - finally, those old buzzwords - B2C to B2B.
In late 2001 there had been a San Francisco-based startup (sorry, no link, they´re gone) on our radar dealing with images in the P2P-area entering the business hemisphere with this idea; they even got VC for it. History.
In addition to it - and besides the two Super G - there is a strong good old boys network in the background with the deeply felt desire: "Don´t change anything! Don´t break up our consensual atmosphere! The wind of change? Yes, only in our pockets! Thumbs up!"
But from time to time new heroes - some wannabes, some real - arise.
Contentbiz - a marketingsherpa publication - has published a long article "How istockphoto.com Sells $4,000,000 Photo Downloads Per Year at $1 Each" that deals with a new company: istockphoto.com. Wannabe or real hero? Discover it yourself.
Basic facts: Founded in 2000 by some "Colorado-based photography nuts", photographers can upload their images to the istockphoto database for free. If a pix is sold, the photographer gets 10 cents (don´t blame me). And photobuyers can buy their high-resolution stock photography for just $1.50 each. They call their company the "designer´s dirty litte secret".
Executive VP Patrick Lor declares istockphoto wiped out two flaws: for the photographer the inventory growth barrier and for the photobuyer the pricing barrier. "The goal was to democratize both ends of the business". To maintain the quality of their stock pool, istockphoto has a three-step quality-assurance system (please see the original article).
The company has an in-house team plus 20 volunteer "image inspectors" reviewing an average of 3,000 new photos per week; about 1,500 are accepted. Right now the database is hosting about 110,000 images.
VP Lor states that istockphoto.com is selling $20,000 of photos per day currently: "We sold 44.52 gigabytes yesterday and the average download ranges from 100k to eight meg. You do the math. Our growth numbers are something like 25-45% month on month growth. It's something like 600% per year. We have a bunch of A-list clients, big Fortune 500 companies have accounts with us. Art directors set up accounts and give their designers all access to it."
This would in fact yield a yearly revenue stream of a least $4,000,000. There are some well-known stock agencies who would love to see these numbers at the end of the year. 
The next target is a deeper penetration of the (photobuyer) designer market. And afterwards - hello Corbis -  the self-publishing consumer marketplace: "This is a business model with almost zero limitations."
If you think with this business model the quality of the images can be only be crap - take a look at the istockphoto.com website. Amongst a lot of everyday stuff there are some stylish cutting edge images - of course not the Getty/Taxi style of being hip, but this is not the only way to see things.
istockphoto.com has a sister company, istockpro.com - also located in Calgary, CA, sharing the same telephone line - with a nifty colorsearch™ image search technology. Yeah, that "pro" at the end: the price structur is totally different in terms of money (mainly starting at  $69.99 up to about $249.99), so are the contributors (f.e. ImageSource, ThinkStock, Brand X and obviously some self-produced material) and therefore the overall photographic image quality. Whereas istockphoto.com is a bit like pearl fishery. But to be honestly true, after a little research and some queries in both databases with the same keywords: there are some pearls at istockpro.com. At incredibile low prices.

To get a first impression what participating photographers are saying, I´m quoting from a posting with the topic "Current Status of Stock Business" written by Monique Harris at Photo.net:

"Before I offer my feedback, let me first say that I consider myself an amateur at photography. I'm still working with a 2 megapixel camera that I got for Christmas two years ago.
Regardless, I started posting my decent photos on IStockphoto.com back in early November. (Istockphoto is a site that sells stock photographs from various photographers.) More than financial gain, my goal was to see if I could get my daughters lovely face featured on a few web sites or advertisements.
Istockphoto pays you a pittance (I could probably find more change just walking down the street!) but that's besides the point. In the 4 months my 18 measly photos have been posted there, I've earned over $1,000.
Not from people downloading my pictures on Istockphoto (where I've not even earned $20). But because I've had companies who have wanted to license my pictures for advertisements. Just this month an ad agency in Canada used one of my photos in an ad for drug manufacturer Glaxo Smith Kline. The ad was featured in 3 different newspapers, with possibly more to come.
Yeah... one of my 2 megapixel pictures that they originally saw on Istockphoto. They came to me, and asked me for my rates. And this isn't one of those 'few and far between' opportunities. I get at least one of these every month.
I think I'm doing pretty well considering the fact that I've got an okay camera, no web site, and only 18 pictures that I'm promoting.
My point is this, if you want to sell stock, be willing to explore EVERY avenue on the web.
Get you own site, promote the heck out of it. Try Google AdWords, if you want immediate exposure on Google. Submit your work to clearinghouse sites like Istockphoto. (Once you register, you can post a link to your web site within your profile.) If you've got the skills, try the more professional sites like Istockpro.com or Corbis.
If you've got a presence in several locations, you'll be hard to miss. This is especially true if you specialize. (My niche is young people of color.)
Anyway, that's my take on the situation. I welcome feedback and questions.
Monique"

But keep mind, that none of "istockphoto.com's participating photographers are making a full-time living from the site." I still wonder that there is no discussion at Editorialphoto.com regarding the business model istockphoto.com is pursuing and the threat it definetely can become in the future for some pros. We´re watching another east-european agency with a similiar business model; we´ll be back in a few days with a comparison and an overview "What are the consequences for the rest of us?"

PS:
This article@contentbiz finally comes up with a related link - to Phototalk. Shortly after mentioning Gettyimages. We´re online since two weeks, we´re doing this for the fun of it. Big thank you! We have however to disclose that this website is *NOT* related to any company in terms of money, interests etc. in any way.

Comments

[Keith Tuomi]

Have a look at our project. It shares a couple key principles as Istockphoto, most importantly that it is optn to submissions from all, however it is focused on a speciality market which has a huge demand for fresh material: nightclub and music promotions.

Free to consign material for photographers and designers, with a 50% commission on sold files.

[Phototalk]

Thanx Keith. We´ll look into it. We´ll know some who won´t like that... . =:-)

[Mark Scheuern]

iStockphoto might be good business for the people running it but it certainly isn't for the contributing photographers or for the stock industry as a whole. Taking advantage of cheap labor to massively undercut the competition is not generally considered to be the practice of ethical businesses. One look at iStockphoto.com's message forums will confirm that there is a general lack of understanding of the stock business amongst their contributors and the folks running the place seem to be happy to keep it that way. It's a bit sad to see someone getting excited over a $10 sale, for which he'll get 20%, when the industry norm is ten times or more that amount and at least 50%.

[Suzanne]

Mark, why do you assume ignorance? Why can't you accept that there are different motivations for different people.

That said, a number of photographers at iStock have different portfolios at other stock sites, including rights managed ones.

You're fabricating a false impression and I query your own motivation in doing so.

[Nazzina]

istockphoto is killing stock photo industry. do you think i will spend Canadian $40 on a slide roll to buy+delevop+scan and travel around like a thristy dog and sell my photos for only 50 cents and only receive 20% of it? NO! We are artists. We don't sit on street and earn pennies by selling our photos to istockphoto. I hope people there will realise it someday and stop selling their photos. I'm a member there since April 2004. But I never bought or sold a single photo from there because I believe it's a total shame of how they are using photographers. People like Guy Kawasaki and istockphoto website owners are earning all the money NOT the photographers.

[Mark Scheuern]

Well, "Suzanne", it's been made abundantly clear to me that iStockphoto's management actively works at keeping their contributors in the dark. I've observed it from their behavior on their message boards, and it's also pretty obvious from the sorts of posts you can see from contributors on that site. Some of them have also asked me about alternatives to iStock because they have a genuine interest but were unaware of options and pretty much how the industry in general operates.

I have fabricated nothing. Perhaps you can explain why iStock goes against industry norms and chooses to pay a paltry 20% on what already is a pittance? Monique Harris, proudly quoted above, herself says "Istockphoto pays you a pittance (I could probably find more change just walking down the street!) Perhaps she's fabricating that as well?

May I also point out that, unlike you, "Suzanne", I have both a last name and an email address.

[Mark Scheuern]

Nazzina, you have some nice images in your blog. Kudos to you for not giving them away and let others unfairly profit from your work. Even those who claim to be making a decent amount of money, short-term (of which I'm quite skeptical), should ask themselves what damage they are doing to themselves and the industry as a whole, long-term.

[Patrick]

Aren't these the same arguments that designers made years ago when PageMaker came out? The true professional photographers will adapt, as graphic designers have.

Does anyone out there really think that telling amateurs that they're ruining the industry will make a difference? 40 million digital cameras were sold last year - more than film cameras for the first time in history. Cheap cameras + cheap memory + millions of snapshot artists = an overabundance of content.

I think that the pros need to re-think their approach to this debate.

[Marisa]

istockphoto is one of the worst ideas in the stock photo industry. If you want to CONTROL your prices, and keep 85% for yourself, instead of 20%, you OWE it to yourself to try shutterpoint.com

[Gene Smith]

The concept works really well and istock does have competition. A competition that motivates them to improve their services and revenue. I already saw an increase of the fee they pay to the photographers because of this. You can check www.dreamstime.com, they have same prices but they award up to 70% to the photographer. That's 4 times more than Istock provides. This means challenge!

[Sally Kuyper]

It can take some time to find your own niche in the stock photography market. 12 years ago I began photographing full time, specializing in flowers, and directly submitting portfolios to all gardening magazines.

Within 2 years my work was being used in the 5 major US gardening magazines. Then my husband and I branched out to animal & travel photography. And our own website. Now we are represented by 3 stock photo agencies. But, we still haven't connected with advertising agencies, yet, except for some calendars.

We have a shop at Cafe Press for framed prints, a blog, and a Squidoo lens. It's more comfortable selling our work this way, for at least 50% of sale price than for a pittance with Istockphoto.

[Nathan]

Monique stated that she had earned over $1000 from companies paying her to use her photos in advertisements. I am confused as couldn't they just buy the royalty free image from the actual site for a few dollars? Isn't that the nature of RF stock photo sites that is causing such a fuss?

[mitzrah]

What's there to argue? Some people believe in selling in bulk at much lower prices while others prefer selling at lower volume but at a high price.

At the end of the day there's the bottom line. If you're comfortable with it, stick with the game, correct?

Let's not think about resisting change in the industry, it will change, there's no doubt about it. Whether the pros will adapt to the change, that's the question that they should be asking.

If you can't beat 'em.... join them? Or stand up for your principles?

I think the bottom line will guide you towards answering that question.

Good luck to all! Pros and non pros.

[sheexists]

This form letter from Getty images/Pumpaudio will also cheapen/ruin the audio industry....encouraging others to write in:

View this as a web page
Dear Pump Audio Artist,
We would like to thank you for your music and congratulate
you on being part of one of the fastest growing music
licensing companies in the world. Since the acquisition of
Pump Audio by Getty Images, we continue to hear praises
from a wide expansion of our clients on the depth and quality
of our catalog and that is a testament to you.
As we plan for the future growth of our offering to the global
music licensing client base, we have determined that to fully
support the 400+ person Getty Images sales staff and invest
in marketing and technology needs that we must make
adjustments to the current revenue split system. By making
these changes, we intend to accelerate the pace of our
growth and achieve our goal of becoming the largest music
licensor in the world.
The new model will be as following:
1) Licensing fees will now be 35% to the artist, 65% to Pump
Audio/Getty Images
2) This change will take place as of July 1, 2009. Any
royalties payable through June 30, 2009 will not be affected
by this change
3) Performance royalty splits will remain at 50% of the
publisher’s share
4) Those that don’t accept the new split will have their music
removed from the system no later than December 31, 2009.
5) The rights you granted to us in the original contract do not
change
If you have any questions, please email
artistrelations@pumpaudio.com.
Please sign the enclosed amendment and send back to:
Artist Relations
artistrelations@pumpaudio.com
Fax #: 845-757-5556
Mailing Address:
Pump Audio
Artist Relations
PO Box 458
Tivoli, NY 12583
artistrelations@pumpaudio.com
Music License Amendment
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