Changes to iStock Royalty Payments

iStock is one of the large players in the microstock photography market, an industry where thousands of photographers are earning an income from their images. During October 2016, iStock announced changes to iStock royalty payments most of which come into effect in 2017. (At the same time, iStock are making changes to the technology they use and the tools and reporting they provide to contributors). In this post, I look at the changes to iStock royalty payments.

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iStock royalty changes need to reflect the growth of subscriptions in microstock

Why Change? The microstock photography market has changed very significantly in the last 5 years, which has meant iStock needs to change it’s royalty payment structure to reflect the industry’s new realities. For iStock itself, the biggest change has been a movement away from ‘credit downloads’ to the ‘subscription’ model.


iStock was initially built on the credit download model – where a customer would purchase credits and then redeem those credits when they bought images. The subscription model has superseded the credit model for most frequent customers.

Under the subscription model, a customer purchases a monthly subscription with a limit on the number of images that can be downloaded in that month. For example, a customer purchases a subscription which allows them to download 100 images per month.

Until now, iStock’s royalty system for paying contributors has not kept pace with the change in the industry.

So what’s changing and what does it mean? The changes are in four different areas.

Change 1 – Redeemed Credits. The redeemed credit system was introduced to encourage contributors to continue to upload fresh, relevant content. It was based only on ‘credit downloads’ and so has not been effective in recent years (if ever!) The redeemed credit system is being replaced by a revised system which recognizes all types of sales, not just credit sales. The good news is – all sales will be recognized. The bad news is the system and targets have not been announced yet. iStock have advised that contributors will start 2017 on the same royalty level as they finish 2016, and that the targets will be announced before the end of the year.

In summary, we will have to wait and see what the system and targets look like.

Change 2 – Exclusive Royalty Rates.┬áThis is a change without much change. Exclusive contributors currently earn between 25% and 45% royalty rate depending on which tier they have achieved under the redeemed credits system.

This royalty structure stays the same. The change is that all downloads will be recognized and that Signature+ collection downloads will count double. The impact for an exclusive contributor will depend on the system that replaces redeemed credits – so again, this is a case of wait and see.

After these changes, all downloads will be recognized (good), and it will be helpful to have files in the Signature+ collection.

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Non exclusive contributors will not like the 15% flat royalty rate

Change 3 – Non Exclusive Royalty Rates. From later this week (25 November 2016) royalty rates for non exclusive contributors move to a flat 15%. Previously the minimum you could earn was 15% – and you could earn more by meeting the redeemed credit targets.

This change will be negative for non exclusive contributors – 15% is less than many were previously receiving, and is less than is available on other microstock sites. I would expect that some non exclusive contributors will stop contributing new images to iStock – and I expect this is an outcome iStock is happy with.

They are looking to encourage exclusive content so that they can compete with other agencies based on the content they provide (in addition to the functionality of the site and price).

For non exclusive contributors – since I published this post iStock have changed the implementation dates. The move to 15% flat commission for non exclusive contributors will now happen on 23 December 2016 for subscription downloads, and 1 January 2017 for credit downloads. (Edited by Craig Dingle on 24 November 2016).

Change 4 – Subscription Download Rates. Until now, subscription downloads have paid a flat fee to the contributor. For me as an exclusive contributor, that has been predominantly US$0.75 for files in the Signature collection and US$2.50 for files in the Signature+ collection.

This flat fee is being replaced by a ‘price per file’ system where the exact amount will vary based on the number of downloads a client makes and the price they paid for the subscription. In some ways, this makes it less transparent but I like that the contributors interests and iStock’s interests become aligned in this process. The contributor will share in the rewards with iStock. The exact impact on a contributors income will be seen in the next few months.

So what does this all mean? The changes to iStock royalty payments are recognition that the current system is not working effectively given the industry move to a subscription driven model. In that sense, change is good.

The changes announced significantly favor exclusive contributors over non-exclusives which will force some contributors to make a choice which camp they would like to be in.

Overall, I am encouraged that iStock are adjusting their royalty structures to reflect the new realities of the industry. If anything, it is a bit late, but I am optimistic that 2017 will bring stronger returns from iStock.

 

 

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