is the microstock business unsustainable?

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Like thousands of other iStockPhoto contributors, on September 7 I was made aware of the shocking news of how that particular microstock agency will pay their contributors (funny adjective, since we are talking about the group responsible for the core part of the business) starting January 2011. If you don’t know what the fuss is all about, I urge you to read this informative report from “The Russian Photos Blog”.

iStockPhoto and their contributors are different sides of the same coin. I can see a little merit in the new proposed model from a business management standpoint, but it is far from perfect, just as I can understand the revolt from the vast majority of contributors, though some overly aggressive statements are not really justifiable. Either way, I believe both parts are missing the point in different ways.

First, iStockPhoto should have realized that there are ethical, if not philosophical, issues involved

in their proposed, better, imposed new rules. Regardless what the game is, one cannot radically change its rules (especially for the worse) in the middle of the championship and expect the players to passively accept and follow suit. Second, one cannot expect that (mostly) well informed individuals will appreciate being publicly patronized or treated like complete idiots who cannot tell happiness from cast iron shoved up their asses. If, and only if, the current business model is truly unsustainable to the point of ignoring all ethics and fairness, still iStockPhoto should honestly and bluntly tell their contributors “sorry guys but I have to shove it up your asses otherwise the business will have to be closed” instead of blowing smoke and pretending the contributor base is made of a bunch of non-questioning stupid followers.

Let’s refrain from getting tangled up with the new payment structure itself and discuss the base argument, which is “the current microstock business model is unsustainable”. Is it really? As many have argued, if this is true, how come other agencies have been and still are prospering while historically paying significant higher commission rates to their contributors?

The real problem we are facing is not that different from those found in advanced quantum physics experiments. No matter how advanced a mechanism we create to register the most incomprehensible of events, the results will still be reviewed, analyzed and ultimately interpreted within the boundaries of the human mind. In iStockPhoto’s case, it means that even pure math can be twisted by morals. iStockPhoto argues  that,  with  time,  all

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contributors climb up their individual historical ladder towards higher commission rates consequently crushing iStockPhoto’s profitability down to the point of breaking the business sustainability. Well, let’s do the math.

Let’s say you are an agent representing hundreds of thousands of contributors whom subscribe to the following commission rate:

up to 1,000 sales – 20%
from 1,001 to 5,000 sales – 30%
from 5001 to 10,000 sales – 35%
from 10,001 to 50,000 sales – 40%
from 50,001 to 100,000 sales – 45%
above 100,001 sales – 50%

Assuming that magically, one morning you wake up to all your contributors reaching the top level in the commission roster, still you would pay the 50% commission **only when a sale is made**, meaning that every time you pay that commission you are also earning the very same amount yourself, so how can this business model be unsustainable? If anything, this model can become unsustainable due to two main reasons:
1) Despite your best sales efforts, the sales minus commission are not sufficient to pay your operational costs and reward your investment (time, money, energy, etc) properly; or,

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2) You, as a professional agent, were stupid enough to create a commission table which knowingly would cause the situation #1 above.

What will   come out of all this mess stirred by iStockPhoto is yet to be seen. I, for one, will leave my small portfolio there since my humble “Golden Contributor Canister Level” never really amounted to much of anything but for visibility leading to commissioned work. At least I can selfishly say that after reading through some of the hate messages on iStockPhoto’s forum I managed to be rewarded with a laugh or two! ;-)

From iStockPhoto’s Forum:
“Hey, where’s my kiss? I didn’t get a kiss. Did anyone get a kiss? I usually get kissed before I get f…..”

“All of you have been so happy to undercut traditional stock photography, copying the best

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selling images, shooting every hamburger you ever ate, and now that the traditional photographers (often derided as ‘trads’ by you) have come in to beat you at your own game, you’re shocked- yes, shocked!- to find out that this is a business, not a little happy family giving each other muffins and logrolling in the forums. Well, welcome to the real world- the one that you made for yourselves. 145 pages of whining and wanting things to go back to the way they were- it’s so pitiful. Face it. You aren’t going anywhere. You are going to stay here, and do what the man says. You are getting the bed you made yourselves, so go lie in it. Or go back to what you do best- arguing over the color of your little ribbons.”

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