iStockphoto changes the commissions structure
What the classical economy says?
If you have an over-supply and a constant demand you have to limit your supply adjusting it to the demand.
A microstock agency can do it in two ways:
1) carefully select only best images
2) reduce the suppliers’ commissions, allowing many contributors to leave and thus reducing the supply stream. It also regulates the load on inspectors, so an agency can save costs employing less inspectors. Both things increase the company’s margins and the final profit, if the revenues remain at the same level.
Economically thinking this is the right thing to do when you are absolutely sure that your customers will keep buying from you.
It looks like Kelly Thompson is sure they will, whatever iStock does.
I would not be so sure though, and here is why.
The TrendsMicro creative market marketing research clearly shows that an average stock photography buyer find and license imagery from 3-4 sources simultaneously. The competition is tight and content is similar if not the same in the leading agencies. On this saturated market differentiation is the key, however the last move of iStock is far of this understanding. Kelly Thompson thinks profit, and in the short term such a move can indeed increase iStock profit.
Did he think about the long term too?
I assumed that at least iStock will try to find the way to keep their best contributors happy. I expected that the top-selling microstock contributors will get some privileges in the new commissions structure, a reasonable “VIP” approach, which would make happy at least that 10% who make 80% of the agency’ revenues.
However, look at this:
“I have read carefully, and basically what I see is that the 5% bump I was expecting sometime in the next year when I finally hit Diamond is actually going to be a 5% pay cut starting January 1st”
dgilder, commenting on Thompson’s announcement at iStock forum.
You can keep reading the original forum post by iStockphoto CEO discovering other contributors’ reactions. I also recommend this post as a good intro to the long and unclear iStock statement in the forum post.
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