Micro Royalties — A Clarification
January 13th, 2011
by Gwyn Headley
Managing Director
OK, never let it be said we don’t listen to you.
It would appear that a small majority of our members are threatening to leave fotoLibra if we pay them more money.
Blimey, I really didn’t make myself at all clear in my last blog, did I? I blame the flu.
I think people saw the word MICRO and just stopped reading. Or understanding.
This proposal has nothing whatsoever to do with cash flow. It is merely a new concept to make image buying more attractive. It may not catch on. It may even not work. But the day we stop searching for new ideas and new concepts will be the day fotoLibra subsides into being just another everyday picture library.
Here’s our reasoning. Please note, this is merely for illustrative purposes only, and none of these figures are real.
With MICROSTOCK, photographers are lucky to make 20¢ for each image sold. So they have to sell 250 images before they earn a penny because payouts aren’t triggered till they accumulate $50. And all they will ever earn from that picture sale is 20¢ per picture sold.
But with fotoLibra’s MICRO ROYALTIES proposal, photographers will be paid a portion of the net sales receipts of the book per picture used, just like an author — except of course the portion will be smaller.
They will be paid after each royalty statement, which is usually every 6 months. fotoLibra payments are triggered when the member has accumulated £30 / $50 worth of sales.
The percentage share of the Micro Royalty will be based on fotoLibra’s existing average picture sale, which is $80. We pay photographers 50% (Platinum, 60%).
On our standard licensing model, the fotoLibra photographer receives an average flat payment of $40 when a sale is made.
Under the Micro Royalty system, the idea is that if a book retails at $10 and sells 10,000 copies in 6 months, the fotoLibra photographer will receive a micro royalty of $40 — the same as our standard licensing model.
When / if the book sells 20,000 copies, the fotoLibra photographer will receive a micro royalty of $80.
When / if the book sells 100,000 copies, the fotoLibra photographer will receive a micro royalty of $400.
When / if the book sells a million copies, the fotoLibra photographer will receive a micro royalty of $4,000. Per picture sold.
On our current licensing model, if the book sells a million copies,the fotoLibra photographer receives $40.
I hope this makes it clearer. It seems like fair play to us.
Gwyn
Speaking as one of those who want an opt-out – trust me, I get it. I understand what you hope to achieve, how you hope it will work etc.
I just don’t believe it will work. I don’t trust publishers and I strongly suspect this will end up in tiny amounts for photographers. That’s why I’ll be opting out to begin with.
Even if it works initially I think publishers will simply screw you down and down on the “micro” royalties each time they come for photos on the next publication.
Do you have any figures for what proportion of books published each year might expect to sell over 10,000 copies, or 20,000, or 100,000 etc?
Gary.
If there wasn’t trust in business there wouldn’t be any business.
We trust our clients, but we don’t trust them unquestioningly. If we don’t know them, they pay by credit card. If we do know them and they ask for credit, they don’t always get a smack in the mouth.
As I commented to the last blog post, “… in six years we have not had one single bad debt, which in these turbulent times is little short of a miracle. You can thank Yvonne Seeley for that. She is remorseless in getting your money. Even when one company did go bust on us she got 100p in the pound from the insolvency people.”
Be bloody, bold and resolute!
I commend your optimism Gwyn.
I’m happy to concede I could be proved wrong and I applaud your attempts to innovate. I shall watch with interest (albeit opted out).
Best wishes,
Gary.
Ps Maybe I should hire Yvonne to chase a few debtors of mine. She won’t have to smack anyone – I always save that pleasure for myself and my “boys”.
Gwyn,
Thanks for that clarification,yes it does make it clearer but as one of your old codgers it seems that my heirs will be getting all that money.
The last blog does have some interesting issues form contributors,that you may want address.
The lack of information on picture calls.
The PR company update.(exposure of Fotolibra)We have images that could sell anywhere,not just book publication.
The use of that swear word MICRO makes us all shudder.
Please read all the comments,again and take on board the issues of all.
It is an interesting model, and might work, but for a lot of books, 10,000 is a lot of copies, and publishers may well never get to that number. It also does mean that we have to trust the publishers both to report the sales correctly AND to stay in business long enough to pay up!
I have to say as well that this whole new model does sound like a way of subsidising the upfront costs for the follies book which we have been receiving so many picture calls for, and I believe was being done by someone connected to Fotolibra.
Just looking at the number of requests, this would have been a very expensive project IF standard rates were paid upfront. If it is – and it is not necessarily the worst model to sell work for – then it might be a better policy to be a little more upfront about it!
Yes, John, we read everything and take it all on board. But fotoLibra is not a democracy — we have to take the decisions and the responsibility ourselves. Sometimes our choices may appear to conflict with the wishes of our customers or our members.
Let’s face it — our members want £1,000 per picture and our customers want them for free. It’s up to fotoLibra to strike the even balance.
And Steve — yes, you are right. You write “I believe [this] was being done by someone connected to fotoLibra.” I am the co-author of the Follies book as well as fotoLibra’s founder. How did you know this? Because it has been mentioned in every single one of these Picture Calls. It’s hard to see how we could have been more upfront!
It struck me that this UK-based gazetteer would be the ideal vehicle to test out our concept — which is PRECISELY “a way of subsidising the upfront costs”. So we are going ahead with the experiment.
We had to get the rights back from the original book publisher before we went ahead. But without the possibility of this innovative scheme, we wouldn’t have bothered because the Follies eBook simply would not have been thought of. So no one would have made any money at all.
We either do it, or we don’t do it. And I prefer to act, rather than sit back and shake my great shaggy head at the impossibility and injustice of life.
Whooooo,calm down,Gwyn,we know you make the decisions,that is why we try to HELP you make YOUR choices.The members and customers do finance the company.
Was that OTT? Sorry — I certainly didn’t mean to be! Calm as a cucumber, me. Or should that be Cool?
The whole proposed scheme sounds OK given that quite a few difficulties could be encountered. However, what thoughts have you about images used for web use? Will site visits account as sales (books), or does online publication detract from your original concept. I’m a little banjaxed about the issue…
Gywn,
The reason I was vague about the connection is that I read the first follies picture call quite some time ago, but none of the others as I haven’t any follies pictures at all. I knew there was some connection, but couldn’t precisely remember what/who it was. What I meant about more upfront, was directly mentioning the follies book in the two blogs about Micro-Royalties.
As I mention in the post, I don’t think that this is the worst model. I have been responsible for trying to price up a few books, and it is always hard to juggle the upfront costs for pictures. You want to pay a fair price, but that works out a lot of money, so you have to try to haggle down the price. This leaves photogs getting a lower rate – even if the book does well. A scheme where photogs are rewarded on a sliding scale and in effect share the risk and share the reward is pretty revolutionary.
I just probably would have mentioned the fact that the first book to be supplied in this way was effectively an in-house project, rather than leave people to make that assumption, that’s all.
Cheers,
Steve
Gwyn,
I understand the model you are proposing. However I am confused now about the way Fotolibra manages the sale of photographs. I thought that rights managed photos was exactly what you are trying to propose for your micro model, ie a fee for the photo that is dependent upon usage and how many copies sold ? Otherwise a flat fee is royalty free or am I missing something.
Regards.
Robert.
Hi Gwyn,
I submit few pictures over a year basically because most of my 12,000 images are of Scotland, in fact over 5,500 are of Scottish Castles.
I am very interested in the Follies project and would like to submit lots of pictures. Unfortunately I am an ordinary member and can only upload 12 at any one time. Could you not relax this rule for this project as it is in your interests to have as many submissions as possible?
Best regards,
Charles Henderson.
Re above comment. Surely if someone has a large number of photos to upload (albeit for one project)then you should be increasing from ordinary membership like the rest of us have to!? I do not think it would be fair for this project or any other and it shouldn’t matter whose interests it is in when the rest of us pay for our membership. Sorry if this sounds stroppy but I pay my membership, upload the photos i want to and sell a couple every now and again – sorry Charles!
Hey, here’s an idea Charles – upgrade your account.
Just a thought.
It may work, it may not, who knows, but the only way to find out is to try, so I’m game.
Couple of things, it isn’t like publishing, authors get a, non-returnable, advance of royalties, they then get royalties after that advance has been earned.
There has, in the past, been many book publishers that con their authors out of royalties by being less than honest with book sales. And is there a cut from PLR, but I think that is being cut anyway.
And why do we have to have these bloody figures in $ instead of £, I’m fed up trying to work this out, I thought this was a UK site, being based in Wales, seemed quite a reasonable assumption to me, and why do I have to keep selecting English instead of US language?
Best
Mick
Gwyn, You have had my responses which have been cleared .. some most not answered away from this topic
But, I gave you support as I said before Nothing ventured.. Naught won !
I can’t see a downside to your proposal, just the opportunity for fotoLibra photographers to financially benefit from a successful book to which they have contributed.
They might even consider using their social networks to promote a book in which they have such an interest – declared, of course.
Perhaps DYNAMIC ROYALTIES better reflects the proposition.
Just a thought.
Yes it is good that you are looking at new avenues of income, I second what Gary says about ‘trusting’ publishers but from another angle. My experience is that it is difficult if not impossible to get a true figure on how many they are publishing. Unless there is a way to check (as in magazines where there is an independent circulation auditor) we are relying on the publishers honesty on actual print runs. What say you ?
regards – Ian
Gwyn,
the figures you used are only suppositions! I,like almost the other, don´t like to work based on suppositions! I know, you’re going to say that will be necessary to implement the scheme, before to see the results, but, I have for sure that you must have some historic about the past,some statistics, of how was the behaviour of the editorial market, or the behaviour of their leaders, at the least from those who was your customers. Then, tell us how many books reached the 100,000 mark, and so on, descending the scale until the 10,000 mark. Only so we could evaluate how good could be this deal . Because, if it is to keep it at the same level it’s today, it’s better to keep it as is ! Or, do you have another better approach to evaluate business expectatives than based in real facts ?
Sell good images for good money. Simples.
I can’t see any downside for the photographers. It will be harder for fotoLibra to keep track but for the photographer all it means is after the first payment which would be no less than we currently receive there may be more in the future.
I want to opt in and can’t wait for it to be rolled out!!
This is isn’t a new business model – only new to this industry / library. Anyone lucky enough to have a HD capable DSLR will have already bought into this concept (with real money). HD video is based on H.264 video standards, that includes over 1000 patents from 29 companies in over 50 countries. It is licenced by MPEG LA who monitor and collect royalties on behalf of these companies. Companies that want to playback HD video have to pay royalties to access this technology. The royalties are usually pushed through the supply chain to the final end equipment manufacturer who then passes them onto the end customer i.e. the person buying the HD DSLR. The payments mechanism is usually based on upfront fee and volume based royalties. There are many other areas where this model works in other industries as well. Like all successful business it is based on trust, understanding, shared risk and shared reward.
Why not combine the new initiative with an existing one … analyse past and probable sales for a book or card or whatever; charge an intial fee and then repeated royalties based on volume. That way image buyers reduce their initial risk as buyers don’t want to pay a Rights Managed Fee based on a high volume they might or might not acheive in the market. But they will have a minimum print run if it’s paper based. The Library and photographer recieve an initial recognition payment for time/effort spent in taking the risk to produce / market an image. If the product bombs in the market everyone comes out about where we would have been; if the product booms in the market everyone is a winner.
What the absolute $ values, initial payments, royalties and percentage splits should be ? I don’t know. But that is where a libraries wider knowledge of the market comes in handy.
Perhaps — “Volume Based Rights Managed” could be the way to go….it works for the technology segment of the photography industry why not for our segment ?
Do I understand it right :
The photographer will receive nothing until and if the book sells 10,000 copies or more or will there still be an initial payment ?
I don’t think it is a bad idea and am prepared to go along with it. I believe Gwyn has been in this business long enough to know what he is doing.
As long as the new system doesn’t affect the rights of my images placed with other libraries, count me in!
Well Im afraid I do dable with the microstock library market and get a better return than with fotolibra (which I have had only 2 sales since I joined at least 5 years ago) and I dont have to pay to belong to them, im afraid this is the only site I lose money on.
Unfortunatly we do have to move with the times and like it or hate it there is a micro market.
With them though payment is on a sliding scale depending on the size downloaded lowest payment is about 30c and the most I have been paid is $43 and this is on a regular basis.
Maybe on here members can chose wich images they wish to be used as Microstock.
The big problems these days is that the digital era has opened up photography to many more peope and the market for low cost images is very competative. Also access to the internet gives people a huge shopping centre to find what they are looking for.
If you guys at fotolibra want to take off anywhere in this lifetime you should do this: Lower the subscription to $1 a month and allow to upload 1000 images. Add another buck = get a thousand more.
This way you will get images only from people who are serious or at least half-serious about stock while allowing yourself exponential growth. You will have to upgrade your server/s, of course, but that would be nothing in terms of investment-revenue. You don’t do any QC, editing, cataloging or even keywording.
Your operating costs are NOTHING compared to those of bigger libraries and you only complain that what you have to spend on marketing is a ton of cash only because your revenue is low. Expanding is the only way to go… if you want to go anywhere from where you are now. Implement the model suggested above (or something very close to it) and you WILL grow. Couple that with the revolutionary micropayment model that you’re considering to implement and you could be the next big thing in the industry. One thing though. Since we’re talking “book sales”, which is nothing urgent, there should be a mechanism for the photographer to opt-in on a per-image basis. And there should be enough information available about the publisher and the specific publication to allow us make an informed decision whether or not any of us wants to gamble with this. Once the buyer selects a photograph for his micropayment project, an email is sent to the image supplier and he/she can decide to either go for it or not. Have it work this way for a couple of years and if it works well, you can make micropayment obligatory for all of your members (with no opt-in or opt-out).
The idea looks good on paper….. but…. I perceive a potential cash flow problem for the contributor in having to wait and see if the book makes that magic sales figure before they receive the basic sum they would have made (a) anyway, (b) sooner – if I have read and understood the information correctly. I am not panning the idea, just having a worry moment. The upside is that, if sales go over the required magic number, everyone is in win-win mode with higher profits. I’d like to see a system that included a fee up front which then included a royalty factor after a pre-agreed number of sales had been reached. This sales target could then be set at a figure that made the first fee a reasonable amount had it been paid as micro-royaties. Royalties are good with anything successful, but a pain-in-the-**** if sales figures don’t meet expected targets. Hope I’m not talking out of my **** either!
I can’t help but wonder if some of the negative reaction to this suggestion is the use of the adjective “micro.” Smacks of micro stock agencies. And certainly, of “micro” payments.
How about “royalty”, like an author gets. Proportional? Sales Adjusted?
And perhaps a less than standard fee for the first X thousand books, then moving upward from there. Sort of (almost) best of both.
I think most publishers are honest people, although I have no proof or experience. And if Fotolibra is willing to monitor sales, that’s great.
Oh, one more niggle. How about not based on sales, but published. Many books are over-published and then eventually sold off for $1 in cheap book bins. Also would be easier to track than sales.
I’m ready to run with this idea, but yes – drop the dreaded and tainted ‘micro’ association, immediately! I like “dynamic”, but almost any other adjective will avoid certain confusion and lingering doubts.
Still interested and the clarification given helps. As above can we use something other than “micro”.
Is it possible to take a real life sale and apply the proposal to it to see what the situation would have been if the publisher had this new option available? I am only too happy for any of my sales to be used as a test/illustration for this purpose.
Mark Goodwin Says:
January 18th, 2011 at 02:13
The way I see it is that if you wish to stay in business today (any business) you cannot stand still. Unfortunately, historically we in the west have a mantra that goes like : “if it ain’t broak don’t fix it!” Whereas those businesses in the east such as Japan have always said “I think this method works very well…how can we do it better?” (Kaizan). We have to learn to welcome change, to try new things, to continually be trying to do things different and better than the rest. If you do what you have always done, I promise you, you get what you have always got! (Not my quote but I can’t remember whose).
I for one I applaud what Gwyn and his team are trying here, and it will get my support, and I guarantee if (when) it works all the agencies will be quick to follow suit.
I understand the call for Marketing (I have been in it for 40 years) and this proposal by Gwyn IS marketing! The definition of marketing is, ask the customer what the want and then provide the product/service they require. It’s the simplest form of selling. What colour do you want, how much do you want to pay for it…OK is this it? Yes..OK how many do you want?… and it is now up to me to ensure that I keep that customer satisfied or be prepared to lose them. If you go and ask any publisher today what is their main concern, I would bet that the majority will say Finance, Cash flow, budgeting, keeping costs down etc etc. So if they need to buy pictures to keep themselves in business, and I can supply them with that service and, at the same time help them with their financial targets, then I am going to have a USP that my competition don’t have.
Finally, the facility to link your photo from your portfolio on fotoLibra to your Facebook page is already there. I have been doing it for a number of weeks now.
I personally have made a couple of business decisions for 2011, one of which is to make fotoLibra my main agency, this proposal from Gwyn and the team has only made me think that I have made the right choice. I only have a couple of hundred of pics up at present but that is planned to change significantly this year.
Well that’s my penneth, I wish you all the ery best for the coming year.
Sorry, I have just reposted this reply as I may have mistakenly posted it to the wrong thread!