Jump to content
Sign in to follow this  
Brian Maudsley

How was Shutterstock so successful while paying reasonable amounts to photographers?

Recommended Posts

I joined in September 2009, about 126 months ago.  Total lifetime earnings $11,242.  Average earnings about $89 per month.  June so far $19.  Shutterstock has grown immensely and become very successful, yet while it was growing it managed to pay out resasonably high rates to the contributors.  So why can they not continue to be successful and still give good payouts?  Is it just simple greed?  Or is the world different now?  Sales have continued to rise as have the number of contributors, yet the payouts per image have plummeted.

Share this post


Link to post
Share on other sites

I just repeat here what I posted in Steven Tritton's thread about the future

 

The reason SS survived this long is because they knew and know how to sell better than anyone and diversity in their businesses. Especially not in the beginning, they were not a media company, there were a tech company. They still are. This thirst for new technology, ,marketing, and diversity kept kept them ahead of the competition 

Share this post


Link to post
Share on other sites

Personally, and I have nothing to back this up, I think they dug themselves a hole with the old payment system and they had to find a way to get out of it. Also they needed a way to future proof their profits.
They have been reducing the price to buyers with 'better' subscription packages. And although the earnings we make on each sale has come down we had the minimum that we would never go below no matter what the asset sold for, in my case $0.36. If SS continued this practise of offering cheaper subscription packages and continuing to pay us the minimum of $0.38 on the highest level, there would come a point at which SS would be making a loss. 

With the new structure the minimum for us is $0.10 which gives SS much more leeway to give buyers better deals. Or dare I say it to prepare for the day they become a free site. I mean in a few years time that $0.10 minimum may turn into $0.01 and the only place after that is nothing. OK, so that's a bleak view, but you get my drift.

If you look at their subscription plans you'll see a buyer can have 750 images which works out at $0.20 per image. On the old rate that would mean the lowest amount SS would have to pay a contributor would be $0.25 that's not good for business. Yes, I know that it would have balanced out with various other packages, sales and unused portions of packages, but still long term it doesn't make business sense. Now that they have dropped our lowest earning to $0.10, they have stopped making a loss on these fully used packages.
And now they have head room to drop prices further to buyers.
I guess they are just trying to stay successful.

Just my thoughts. I hate what they have done, but I also think this is in part why, and I can get that.
Of course I could be way off the mark too. Who really knows?!


 

Share this post


Link to post
Share on other sites
2 minutes ago, Linda Bestwick said:

If you look at their subscription plans you'll see a buyer can have 750 images which works out at $0.20 per image. On the old rate that would mean the lowest amount SS would have to pay a contributor would be $0.25 that's not good for business. Yes, I know that it would have balanced out with various other packages, sales and unused portions of packages, but still long term it doesn't make business sense. Now that they have dropped our lowest earning to $0.10, they have stopped making a loss on these fully used packages.

 

That's a great point. One of the indicators that the old rate may have become more and more unsustainable in recent times is the fact that the majority of June sales appear to be of the 10 to 14 cent variety for a lot of contributors irrespective of their level. Which probably means a vast majority of their customers go for large subscription packages and the ODDs and ELs are only dwindling rapidly. So the balance may have collapsed irreversibly.

Share this post


Link to post
Share on other sites
4 minutes ago, balajisrinivasan said:

That's a great point. One of the indicators that the old rate may have become more and more unsustainable in recent times is the fact that the majority of June sales appear to be of the 10 to 14 cent variety for a lot of contributors irrespective of their level. Which probably means a vast majority of their customers go for large subscription packages and the ODDs and ELs are only dwindling rapidly. So the balance may have collapsed irreversibly.

Yes, that is exactly what I was thinking and seeing. Unsustainable on the old system, but with % payments and a low minimum, sustainable for a long time to come.

Share this post


Link to post
Share on other sites
2 hours ago, Brian Maudsley said:

I joined in September 2009, about 126 months ago.  Total lifetime earnings $11,242.  Average earnings about $89 per month.  June so far $19.  Shutterstock has grown immensely and become very successful, yet while it was growing it managed to pay out resasonably high rates to the contributors.  So why can they not continue to be successful and still give good payouts?  Is it just simple greed?  Or is the world different now?  Sales have continued to rise as have the number of contributors, yet the payouts per image have plummeted.

Because other microstock agencies (especially IS) offer cheap photos, so Shutterstock has to offer plans with cheap photos to compete.

Lately, Shutterstock hasn't done well. People say Shutterstock has made so many millions of dollars, but that is not relevant. What you have to look at is earnings per share and return on investment. Shutterstock's EPS is only $0.61 on a share price of about $36, so EPS is about 1.7%. That doesn't make shareholders happy. 1.7% is not a good return on investment, and the dividend rate is way lower. Shutterstock isn't earning nearly enough to pay a reasonable dividend.

Also, the 5 year profit growth rate is negative. That is bad. If management can't keep growing profits and generate a EPS that allows sufficient dividends to keep shareholders happy, then management will find itself replaced.

In order to compete, Shutterstock has a plan (for example) that offers 750 images for $249, or $0.33/image. Paying contributors more than they get per image is simply not a sustainable business model, which is why they moved to a percentage based model. Raising the price charged to buyers so that they could pay contributors more would be nice, but this is a free market economy and they still need to compete with IS and other agencies if they want to stay in business.

While I don't like the new royalty rates, I do understand. My biggest problem is the rate reset in January. Shutterstock said that they want to reward contributors that upload fresh, relevant content. But this isn't the way to do it. The buyers reward contributors who upload the content they want by buying their photos. Shutterstock doesn't need to take any additional action, and should stick with lifetime based percentages, or at least a 12 month moving average. Resetting the rate in January does not reward buyers who work hard at all, it penalizes everyone.

For me, at least for now, it will be business as usual, but come January, if they still insist on resetting contributor levels to 15%, I will be gone.

 

Share this post


Link to post
Share on other sites
11 minutes ago, Doug McLean said:

Because other microstock agencies (especially IS) offer cheap photos, so Shutterstock has to offer plans with cheap photos to compete.

Lately, Shutterstock hasn't done well. People say Shutterstock has made so many millions of dollars, but that is not relevant. What you have to look at is earnings per share and return on investment. Shutterstock's EPS is only $0.61 on a share price of about $36, so EPS is about 1.7%. That doesn't make shareholders happy. 1.7% is not a good return on investment, and the dividend rate is way lower. Shutterstock isn't earning nearly enough to pay a reasonable dividend.

Also, the 5 year profit growth rate is negative. That is bad. If management can't keep growing profits and generate a EPS that allows sufficient dividends to keep shareholders happy, then management will find itself replaced.

In order to compete, Shutterstock has a plan (for example) that offers 750 images for $249, or $0.33/image. Paying contributors more than they get per image is simply not a sustainable business model, which is why they moved to a percentage based model. Raising the price charged to buyers so that they could pay contributors more would be nice, but this is a free market economy and they still need to compete with IS and other agencies if they want to stay in business.

While I don't like the new royalty rates, I do understand. My biggest problem is the rate reset in January. Shutterstock said that they want to reward contributors that upload fresh, relevant content. But this isn't the way to do it. The buyers reward contributors who upload the content they want by buying their photos. Shutterstock doesn't need to take any additional action, and should stick with lifetime based percentages, or at least a 12 month moving average. Resetting the rate in January does not reward buyers who work hard at all, it penalizes everyone.

For me, at least for now, it will be business as usual, but come January, if they still insist on resetting contributor levels to 15%, I will be gone.

 

Agree with your comments and especially regarding level being based on a 12 month moving average.

Share this post


Link to post
Share on other sites

There seems no future for contributors. Many of us are talking about moving to other stock photo companies such as AS etc. Eventually all the stock companies will have to follow suit to be competitive with SS, so a photo will sell for 0.1 everywhere. 

Share this post


Link to post
Share on other sites

SS is a public company with share traded on the stock market. There are basically 2 kinds of companies, high growth where profit is not really the main objective but to take market share (uber, amazon, ...) and more mature companies that have low or no sales growth but have a nice profit margin and pay dividend. SS saw its growth collapse in 2019, will be negative in 2020. Their big problem is that the valuation is based on high growth with a price earning ratio of 70 (it's huge, market value is 70x 2019 net earning) and to avoid the share to crash, they have to turn the company as a money maker with much higher net margin. Hence the cut of commission and the dividend. If they triple their profit by this, the price earning drops to 20 and it make it resonably priced. Forget the new CEO, he was just hired to do the dirty work.

Share this post


Link to post
Share on other sites
2 hours ago, Linda Bestwick said:

Now that they have dropped our lowest earning to $0.10, they have stopped making a loss on these fully used packages.
And now they have head room to drop prices further to buyers.
I guess they are just trying to stay successful.

Probably very true, I suppose it is the way they went about it which has been a disaster.  I am sure with a bit more PR effort towards us contributors they could have actually explained the situation!

2 hours ago, Doug McLean said:

The buyers reward contributors who upload the content they want by buying their photos. Shutterstock doesn't need to take any additional action, and should stick with lifetime based percentages, or at least a 12 month moving average. Resetting the rate in January does not reward buyers who work hard at all, it penalizes everyone.

 

This is what really bugs me,  it is bad enough now on level three but restarting again in January will be extremely dispiriting.I find, with my not very big port, that it continues to be the older images which sell anyway,  I cannot see that if I started uploading wildly now it would generate many more sales, at least not for a year or so.  I have stopped uploading.

Share this post


Link to post
Share on other sites

After the huge outrage from contributors over the step SS has taken, this feels a lot like a “come to realisation” thread as to why SS did what they’d done.

Lots of contributors are generally at the receiving end of this new earning system. 

It’s plain to to see that SS has managed to cut their losses if not making a greater profit margin for themselves.

For now.

Share this post


Link to post
Share on other sites
1 hour ago, James Jiao said:

There seems no future for contributors. Many of us are talking about moving to other stock photo companies such as AS etc. Eventually all the stock companies will have to follow suit to be competitive with SS, so a photo will sell for 0.1 everywhere. 

The problem is that SS was always the best  for me.

 

I feel that SS has always had a better community than any other agency.  No matter what we think of the arguments and general bad feeling in some of the forum threads a lot of us continue to read and follow what is going on.  I myself have learnt a great deal by following the forums.  So I feel let down by Shutterstock, the occasional "friendly faces" of Kate Shutterstock and Alex Shutterstock, were just a smokescreen.

Share this post


Link to post
Share on other sites
9 hours ago, Brian Maudsley said:

The problem is that SS was always the best  for me.

 

I feel that SS has always had a better community than any other agency.  No matter what we think of the arguments and general bad feeling in some of the forum threads a lot of us continue to read and follow what is going on.  I myself have learnt a great deal by following the forums.  So I feel let down by Shutterstock, the occasional "friendly faces" of Kate Shutterstock and Alex Shutterstock, were just a smokescreen.

i feel bad about SS but not really in a mode to try other stock photo companies, which may all end up with the same price of 0.1 one day, so doing nothing right now. i guess we all have to be realistic. in the near future, a DL is just like a "like" in other social media. 

Share this post


Link to post
Share on other sites

As a footage-only contributor who doesn’t have a good understanding of the way image subscriptions work, I also wondered about this, until a still image contributor explained to me that although it may seem that SS is getting almost nothing, the thing is that these subscriptions in many cases are not fully used. For example, a customer pays for 350 images in a bulk, uses only 200 images, contributors get their 35% share which is 27.3$ and the rest goes to SS, that is 58.5$. Shutterstock accounts reported they are earning more than ever, so presumably this model has been working in their favour.

Share this post


Link to post
Share on other sites
5 minutes ago, synthetick said:

As a footage-only contributor who doesn’t have a good understanding of the way image subscriptions work, I also wondered about this, until a still image contributor explained to me that although it may seem that SS is getting almost nothing, the thing is that these subscriptions in many cases are not fully used. For example, a customer pays for 350 images in a bulk, uses only 200 images, contributors get their 35% share which is 27.3$ and the rest goes to SS, that is 58.5$. Shutterstock accounts reported they are earning more than ever, so presumably this model has been working in their favour.

Of course it does. "The house always wins." 

Share this post


Link to post
Share on other sites
17 hours ago, synthetick said:

As a footage-only contributor who doesn’t have a good understanding of the way image subscriptions work, I also wondered about this, until a still image contributor explained to me that although it may seem that SS is getting almost nothing, the thing is that these subscriptions in many cases are not fully used. For example, a customer pays for 350 images in a bulk, uses only 200 images, contributors get their 35% share which is 27.3$ and the rest goes to SS, that is 58.5$. Shutterstock accounts reported they are earning more than ever, so presumably this model has been working in their favour.

Exactly. That has always been the basis of large subs packages and the payout to contributors. I wonder whether it still works as much in SS favour as it did 5 years ago because remember that buyers have beancounters in their structures too. If you have a 750 sub package/month but only use 100-150 images, this will not go unnoticed and will likely be corrected to increase 'efficiency'. Only SS has the details and will have noted any change in uptake because that affects their profits directly under the old system of contributor remuneration. Who knows? Could just be pure greed by the execs wanting to ensure their bonuses.

Share this post


Link to post
Share on other sites

Well, everybody loser in the race to the bottom. Shutterstock should remember one rule, "you got what you paid for". If contributors vote with submissions, buyers will vote with their money, bye-bye earning grows.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...