Shutterstock’s IPO is boring stuff to say the least. But it exposes the lies told to recruit contributors, and reveals the risks incurred by those foolish enough to license crowdsourced images.
I once wrote that microstock was more like a cancer than a business. A sound business operates on a principal of fair exchange for both its employees (contributors) and clients. Conversely, microstock, like a cancer, profits by consuming the very foundation upon which the industry is built. Now we see that Shutterstock also knows this.
In its IPO Shutterstock states the need to attract new contributors. In an industry where photographers are aggressively seeking ways to market their work, this should not be difficult. Of course retaining them requires licensing the work for what it is actually worth and paying contributors a fair percentage of that.
Their problem is clear. Despite the hype of the fortunes to be made, the figures in the IPO show that the average microstock photographer earns about
$1000 per year despite shooting and submitting thousands of images. That comes out to a whopping $83.00 per month. Not quite enough for two tanks of gas, and certainly not enough to replace the camera when it wears out in a year of heavy use. Even more tragic, Shutterstock says contributors earn more with them than any other microstock agency.
When its contributors are not fairly compensated, it makes investing in Shutterstock a bad idea. It doesn’t take contributors long to realize they are losing money and get out. So Shutterstock needs to find an ever increasing flow of new contributors (who have not been shooting long enough to provide quality work) to feed the cancer. This in turn reduces the earning potential of the existing contributors even more and makes the images less attractive to buyers and down the chute we go.
This could be tolerated if the damage was limited to just those who choose to “license” their work as microstock, but it isn’t. What Shutterstock is fond of calling “our distruptive pricing model” in their IPO is exactly what they say. It has taken a heavy toll on stock photography agencies that do license the work at a fair price, and the industry as a whole.
The economics here simply don’t work. Shutterstock contributors get somewhere between 20 cents and 38 cents when an image is licensed. Think about that. If you are shooting food and want to add a parsley garnish, you will need to license the image four more times to pay for the accent. Want a pretty new tablecloth for the set? You will need to license the image another 100 times to pay for it. What about the cost of the food itself? Let’s say you spend $35 and cook and style it yourself… that’s another 175 licenses to cover the cost of the food. And of course we shouldn’t worry about the studio overhead and pay for the photographer. We all know photographers only work for the thrill of seeing someone else profit from their work and creativity. (sarcasm)
And if those numbers are scary, think about the reality of it when models, makeup artists, stylists, location fees, permits, and wardrobe are brought into play. A photographer will have to license an image about 10,000 times before he breaks even. With 19 million images in the library and growing fast, the odds are against the image even being seen.
This is also not good for the clients (and perhaps why Shutterstock states it must continue to find new markets and clients to remain profitable). If the image was profitable for the photographer, that means any place the image buyer looks, he will see the same image used by his competitors. Nothing like being distinctive.
But there is an even greater concern for microstock clients. In the crowdsourcing business model, Shutterstock (or any microstock agency) does not know it’s contributors. They are faceless, mute people who upload photos over the internet. There is no relationship. This creates the following problem:
“We have been subject to a variety of third-party infringement claims in the past and will likely be subject to similar claims in the future. We license all of our digital imagery from photographers, illustrators and videographers, and, although we have staff committed to reviewing each image that we accept into our library, we cannot guarantee that each contributor holds the rights or releases he or she claims or that such rights and releases are adequate.”
That is, Shutterstock and the other microstock agencies do not even know whether the person who submitted the images is the creator of the images or if he stole them from someone else. And yes, it does happen.
Shutterstock admits that it has difficulty discovering and enforcing copyright violations and abuses of the images their contributors entrust to them. Why this is the case is obvious. Likewise, it is difficult for the contributor to find an attorney to take your case when you tell him the infringer cheated you out of a quarter.
iStock photo led the race to the bottom on photo prices and Shutterstock took it one step lower with the subscription model that pays photographers just pennies for a license. And by aggressively recruiting photographers to contribute tens of thousands of new images each week and copy existing images that are successful, the older contributors that helped build Shutterstock are penalized and frequently complain on forums that they work harder for less money each month.
A business model that uses up its contributors and damages the industry as a whole is not sustainable. Bruce Livingstone, iStock’s founder saw the writing on the wall. He took the money and ran when Getty Images offered him a cool $50 million for it. I would advise Shutterstock founder Jon Oringer to do the same. Eventually the word on the street will overpower the marketing hype. Quality contributors will vanish. And the clients will realize that the low budget images dictated by the twenty five cent commissions simply don’t help their business and look elsewhere.
The push back has already began and photographers are fighting back. Yuri Arcus, loudly held up as an example of the vast fortunes to be made in Microstock was recently quoted saying he did not believe a photographer entering microstock today could hope to earn a living at it. He also stated his own return per image was dropping fast and his income could not be sustained. He took action to protect his earnings and opened his own personal stock photography site. Ron Chappel, another microstock heavy-hitter pulled out and took up ariel photography after realizing no matter how many hundreds of images his stock photo factory uploaded per month, the money wasn’t there.
Most photographers can’t afford to build their own custom stock photo sites like Yuri, but there are affordable ways to do this. Several off the shelf stock photo website software packages exist ranging from free to a few hundred dollars. Photoshelter and similar photographer web site platforms offer great solutions for licensing stock at fair pricing the you set for as little as $10.00 per month. Many photographers are starting to take advantage of such solutions. (if you feel at all intimidated by licensing and pricing, Photoshelter has made this very easy to understand. They even offer numerous free guides on various aspects of being a successful photographer, including one on how to sell stock.)
Hopefully Shutterstock will have a change of heart and work to restore value to our work instead of looking for new markets and contributors to plunder. While it is true the blogger can’t and won’t pay as much for an image as a Fortune 500 company, there was certainly no reason to let the Fortune 500 company have the image for the same price. That is why the rights managed system that many have worked so hard to destroy was so fair. It made it possible for photographers to earn what they needed to produce the work others profit from, while still enabling those with smaller businesses a way to obtain the imagery they need.
As photographers, we can help by taking a moment to express our disapproval. Write a letter to Shutterstock urging them to set a good example and start pricing photography at what its worth, what it costs to produce it profitably… that is the prices that prevailed before microstock eroded the foundation.
Their address is:
Shutterstock Images LLC
60 Broad Street, 30th Floor
New York, NY 10004
And if you are in the mood to get bored, the IPO can be read here:
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