Commission change - James West comments

[Alamy]

Thank you for all of your comments and emails. I think I have replied to everyone who emailed me directly, but before I sign off for the evening here’s a bit more info on the reason for the change. Apologies for typos (the grown-ups who police my work have left the building).
 

2018 will be a high-water mark in revenue at Alamy. Normally this would be cause for celebration, but growth has flattened off this year. It's up only 2% on last year after a period of super high growth.

 

If things continue to be flat, which I think is the base case scenario, then revenues to our contributors will either stay flat or worse, start to fall.

 

So we're taking action now:

 

- Significantly reducing Alamy's operational costs (to put it in context - 2018 to 2019 will represent the biggest cost reduction we have ever attempted)

- Moving the royalty split to 60:40

- Big focus on international expansion, local language support from website to customer service to account management, re-engineering our core customer experience from search to checkout, upgrading our datacenters to latest technology, better content insights, new products, updated design and marketing etc.

 

If I thought we could continue to grow without moving the royalty split, I'd definitely rather do that. The choice is basically between continuing as we are, with revenue stalling and hoping for the best, or invest and get working on things that will move the needle.

 

Our larger competitors are currently out-investing us but they are not invincible. Shutterstock has reached market saturation and is vulnerable to a moody stock market that forces them to consider things that keep either the revenue or operating profit growing - if they have reached near saturation in revenue then they'll start to turn to their contributors for more operating profit. They are already paying out 30% on average and 20% to new contributors. Getty also average around 30% and are facing a $2.35 billion debt repayment.

 

Alamy's sole focus is continuous improvement of the customer experience and the long term value to our contributing photographers. I think we can continue to take market share from our larger rivals and pay our contributors a higher royalty. If things go really well then maybe we can revisit the royalty split in future or look at some of the suggestions that have come from contributors for some kind of contributor dividend. I'm genuinely open to this as it effectively locks out or less efficient larger competitors.

 

We deliberately built our business around a contributor contract that is a rolling 45 days long, with no exclusivity, to keep us honest. If contributors become unhappy with us they can vote with their feet anytime. This keeps us focussed on doing right by them in the long run.

 

2018 is also our high-water mark for royalty payments to contributors. This is a direct result of the cost savings, investments, and royalty changes we made between 2012-2015. I want us to repeat that and return the company to high growth and higher royalties to you.

 

James

[Cryptoprocta]

Essentially, like Kelly Thompson before you (formerly of iS / G) you're saying this business is pretty much unsustainable, or will be soon for suppliers.

[Alamy]

It's not unsustainable if the plan works. Last time we did it, it worked.

 

Option 1:

Keep things as they are and net royalties to contributors will either stay as they are or fall.

 

Option 2:

Keep trying new stuff and hope that the additional cost of doing that works out better than option 1.

 

J

[xsync]

Will you and your staff be taking a 20% pay cut as well?

 

That's effectively what your doing to your contributors.

[Alamy]

9 hours ago, funkyworm said:

 

With the risk that contributors who are seeing their Alamy income collapse consider Alamy "old stuff" and themselves go and do "new stuff" before they "get stuffed"

 

 

Yep definitely a risk. It's on us (Alamy) to deliver better returns to contributors asap.

[Chuck Nacke]

Where did the pages of this thread go?

 

Bad move on a day full of bad moves.

[Cryptoprocta]

33 minutes ago, Alamy said:

We deliberately built our business around a contributor contract that is a rolling 45 days long, with no exclusivity, to keep us honest.

Fair enough, but why did you introduce an exclusive button in the new AIM?

AFAIK, it does nothing now, but presumably you thought there might be some advantageous use for it in the future?

[Cryptoprocta]

2 minutes ago, Chuck Nacke said:

Where did the pages of this thread go?

Where it always was:

https://discussion.alamy.com/topic/10782-commission-structure-single-thread

[Alamy]

Exclusivity button is to inform us that the image is not elsewhere - can be useful for price negotiations or tracking infringements. We don't insist on it.

[imageplotter]

So, preparing the business for a PE sale after all then, are we? 

 

 

[Deborah H]

This appears to be just what it is -- GREED -- a way for Alamy to profit from the hard work of other people who receive fewer returns every year.

 

Gee, can you tell how well your 'message' is going over. I anticipate a LOT of 'voting with our feet' about to happen.

[Cryptoprocta]

36 minutes ago, geogphotos said:

Last time this happened, and the time before, it took me years to get my income back and that required a huge amount of new images and cost.

Quite.

Unsustainable.

 

[Sultanpepa]

James it's OK for you to think change things up and grow, but that's twice now you've introduced retrograde changes to my contract percentage. I fail to see where my perceived growth has come from? Every year contributors complain that in order to achieve the same income they have to produce more and more images. All we can hope for is to tread water. So every time you reduce our percentage that is our new top line. I never really get to see the growth,  just lower prices and lower commission rates. Where is the incentive. You admit that you have been naive and that you have learned, I don't think you have. I think you've just made your biggest mistake. i.e.  Forgetting the very people who produce and have consistently grown this company's income. You have not only put this at risk you have trashed and betrayed the partnership which we all bought into. I ask you to reconsider, find some other way.

[Phil]

38 minutes ago, Alamy said:

It's not unsustainable if the plan works. Last time we did it, it worked.

 

 

Incremental changes provide limited incremental results or we wouldn't be having this conversation now and can look forward to another round of cuts in the future.

 

It does appear the saturation point is at hand for current models.  What is needed is something radically different to continue forward meaningfully for all.

 

Curious if a blockchain based model of an Alamy Digital Content Marketplace similar to Wemark concept has been considered as a new way forward? 

 

 

[Chuck Nacke]

Mr West,

 

Since it is obvious that you and the management at Alamy are watching this thread.

I do hope you are aware of the damage that you have caused to the trust of the people

who make up the very core of your business?  I do not know how much experience you

have in the photo agency / library business? but based on my experience with: Sygma, Gamma,

The Picture Group, Colorific, Leftakuva (sp) Tony Stone, Pacific Press, Marka, etc.  I can tell

you that once you have lost the trust of your contributors your agency or library is finished.

 

I for one of many wish that the video you released this morning had not happened, it was a very

poor business decision on your and Alamy's part, again in my opinion.  

 

I can tell you and all that I will not contribute to an agency or library that does not do a 50 /50

split on agency licenses. 

 

Mr West,

 

I just read your post above again and in my opinion it is much better than that horrible video you

put out hours ago.  I do understand what you are saying, BUT I will not go down to 40%.  Sorry that

is my "line in the sand."  I will also tell you that today is a very sad day,  I really believed in Alamy.

 

Chuck Nacke

[Ollie]

Sultanpepa has said it well.  But I'll add the following thoughts.

If James really thinks this issue is open to reconsideration at some point in the future, I suggest we start now by suggesting ways Alamy can reduce its current operating expenses.  Let’s start with whoever is working on the “What Should I Shoot?” list.    This can’t be worth whatever salary that person is currently earning.  It is hard to take this feature seriously; today's list lists 4454 topics.  Surely, looking at the list, many of these might be requests Alamy was unable to fill, others are Alamy's attempt to predict the future.  So if someone requested an item in the past, is that buyer still waiting to see if some Alamy member eventually uploads such an item?  I would guess that a lost opportunity for some of those specific items will remain lost.  For such requests as "Andrew Jackson's inaugural", which took place in 1829, or Beethoven's funeral (1827), surely any knowledgeable photo researcher is going to find the extant drawings and sketches of these and similar historical events in the archives of agencies specializing in archival resources long before any Alamy photographer can find, copy, and upload similar images.  In some cases Alamy is using common sense to project future needs ("hip millennial"; "aerial images of ...."), but surely any photographer interested in this kind of subject matter is already producing it.  Who’s going to study this list and then try to respond to it?  Let the employee working on this project go.

Alamy Measures shows for the last year what Alamy customers have been searching for, and Jackson's inauguration, Beethoven's funeral, and hip millennials don't show enough interest to motivate anyone to spend time trying to fill that need.  Now as for "American people in everyday situations...."  Wow, there's one with lots of potential.  Why am I still sitting at my computer?

While we’re talking percentages, James said nothing about the commission split with sub-agency sales.  I hope that Alamy is also reducing the share Alamy allows the third-party distributors to keep.  30% to the image creator has always been unfair.  Shouldn't go any lower.

[Paul Mayall]

Disappointing Alamy has changed the commission, it seems they are joining many others with the 60/40 commission platform, i would like some good news in the way of Alamy guaranteeing us contributors a reasonable minimum fee for our images e.g. $20 upwards, this would help when it comes to these bulk deals that are made with large concerns.

Alamy sell a great deal of images therefore must be flush, is it greed ? we will never know.

One thing i do know, the contributor is not flush.

Paul.

[CHP]

Removed my well intentioned but not well received suggestion for Alamy to consider other things before reducing the royalty rate across the board ...

 

Clarence

[Chuck Nacke]

CHP,

 

BAD idea.  Make it equal for all and let the client decide what they license.

 

50 /50

 

Chuck

[CHP]

5 minutes ago, Chuck Nacke said:

CHP,

 

BAD idea.  Make it equal for all and let the client decide what they license.

 

50 /50

 

Chuck

 

I meant to start by saying that just like the other contributors who have already posted, I am NOT happy about the reduction in royalty rate.  But, if something must be done with royalty rates (according to James), can't/shouldn't some other options be considered before reducing the rate across the board?

 

Clarence

[njene]

^^ Operational costs cutting biggest ever : a large part of this is the commission cut no? what other cost cuts are going to take place? I t seems counter intuative to mention operational cost cutting, while announcing international expansion, data centers, etc as mentioned above which basically is operational increasing expenses.

 

i know this is all corporate speak, but one statement counters the other, and basically we all know on whose backs the bulk of cuts this will fall on. The contributers are funding the expansion, which may produce temporary results until the next time you experience a flat year. Nothing goes up every year due to market forces and economies being in flux, and at some point the image market will start to mature and growth will by necessity level off.

[Chuck Nacke]

Bla Bla Bla

[Calum Dickson]

Hello James,

It appears that you have added a few new “tools” to the Alamy website as a precursor to the commission decrease announcement. You are now asking contributors to market their own work through “Your Alamy Portfolio” and in return for this investment of time and effort you will take another 10% of their commission?

 

You are also providing a tool to let people know what to shoot, and in return your business model is to sell these images as IQ sales over 5-year terms, thereby cutting of future revenue stream for 5 years all the while giving the contributor a nett amount which adds up to about the cost of a cup of coffee?

 

You talk about improving customer experience and yet you persist with a stack it high sell it cheap mentality. Do you really need 315,823 images of lions? Is that really going to provide a great customer experience sifting through that lot? Why not curate the library and focus on quality over quantity? Does Quality not always command a higher price?

 

What are Alamy’s notable innovations? “Personal Use Licences”? Perhaps we should call them by the name the contributors know them by “A licence to infringe”?

 

What is your success rate with pursuing infringements James and is the fee you charge really a deterrent or does it just encourage it?

 

The real problem James is that you are just following the larger competitors and not leading them. You are just matching them turn for turn. You are doing nothing to innovate and what you do is done half-heartedly (like the recent tools).

 

Do you really want to do something radical James – give guaranteed rates for “what to shoot” and let the contributors decide if it is a valid investment. Or be really bold, turn everything on its head and let the contributors set their own prices, and let the market decide if it is willing to pay.

 

You say “If things continue to be flat, which I think is the base case scenario, then revenues to our contributors will either stay flat or worse, start to fall.” No James if you are taking another 10% they are definitely going to fall.

 

Lastly James your video last night was simply not good enough, you are the CEO and the face of Alamy. You need to smarten up your appearance and stop rambling.

[Martin Carlsson]

"Big focus on international expansion, local language support from website to customer service to account management, re-engineering our core customer experience from search to checkout, upgrading our datacenters to latest technology, better content insights, new products, updated design and marketing etc.

 

If I thought we could continue to grow without moving the royalty split, I'd definitely rather do that. The choice is basically between continuing as we are, with revenue stalling and hoping for the best, or invest and get working on things that will move the needle."

 

As much as the reduction stings, I choose to believe that the above statement is true and honest, which makes me able to support it. I rather do 40% commission from an agent that "does something", then 50% of one that doesn't do anything. It is perilous times and we're heading for worse, the previous one Alamy managed to get through ok compared to others and are still here with loads of experience of such times - getting the ship in order before the storm seems wise. 

[gvallee]

9 minutes ago, Martin Carlsson said:

"Big focus on international expansion, local language support from website to customer service to account management,

 

James, I take it you're no linguist. You refused to listen that automatic software translation is total gobbledygook. 

I hope you take this into account for future international expansion and find another solution. Otherwise, you're heading for disaster.