the microstock war

  Fotolia, one of the big six microstock company, has somewhat launched the Reseller API, thus reinventing the agency-subagency model. In a nutshell, anyone can start representing Fotolia tomorrow under another brand without actually hosting any images. The API allows you to pretend you are hosting while every search and download is actually done behind the scenes on the Fotolia server. You just build the frame. The unknown, for now, is how the revenue sharing is done. I believe that in the other reseller API models they have, it is 10% of all sales. It just might be the same. Thus, for an image sold for $5 , the “API subagent” would get $ 0.5 ( 10%) , Fotolia’s  $2.00 (their commission is 50% for an exclusive photographer minus the 10% taken by the API Subagent)  and the rest goes to the contributor.

It is a good deal for Fotolia and for the contributors. Both would do nothing more for an increase of revenue. The API subagent, on the other hand, would have to pedal hard to generate substential revenues even if his cost of entry would be exceptionnally low.

One notable change here is the API. Unlike traditional RF companies that still distribute their images to their subagent via CD , FTP or DVD’s  and have their library replicated many times around the world, this model is much, much cheaper. Fotolia will need strong servers to support the huge load increase but they must have calculated they will still come out ahead. After all, the cost of computer power is going down.  It is a model close to what AGE Fotostock has had on the market for a while with their THP fotoservice , an upload once, distribute multiple time central database. The issue  with THP, according to some of its users,  has always been that AGE tinkers with the search engine so that the AGE production always comes out first on any search.

However, the idea of not replicating your database is the next big step in photo agency distribution. In some places, the cost of image distribution to subagents reaches in the hundreds of thousand of dollars  a month with absolutely no guarantee of sales. Most of the time, these package of images are violently edited down making the cost of getting an image to an international market even more expensive. By using an API, like Fotolia, there is no editing and no fees. Picturemaxx and other companies offer this virtual API to existing photo agencies. An agency like Mauritius Images in Germany hardly host any images of its partners anymore relying only on direct connections.

So, what of our friends at Fotolia: Well, they will dilute their brand, one could argue. but with 90% of their content also available on Istock, Dreamstime, Shutterstock and others, who cares ? They have few exclusives thus do not need to protect their brand so much. They will certainly save in marketing cost, the highest channel of expenditure in any microstock agency and probably have an easier entry in smaller markets. It is easy now for someone located in Indonesia, for example, to launch a full-blown microstock agency. It will much more expansive for Istock to customize their interface for the same market.

Is Fotolia going will thus dominate the microstock world ? The subagent model is not new and the past has shown that, while it is the least expensive way to enter a foreign market, it is no guarantee of world supremacy. Everyone in the traditional RF universe uses multiple distributors worldwide with more or less success. There is more to invading a market than the ease of reach. You also need the pertinent content and the right relationship. And even when ImageBank used the franchise model, while doing well, it did not protect them from the arrivals other, better, stronger competitors like Tony Stone.

Furthermore, Fotolia might just cannibalize itself, with those resellers taking their direct clients away, eating itself from the inside. Certainly not what they are looking for as they would end up loosing revenue. It will be interesting to see what type of agreement they put in place ( not on their website at this time).

Finally, the contributors: Fotolia’s agreement does not mention anything at all. It is not  an issue currently addressed in the “agreement”. Thus I can upload images to Fotolia today and have my images sold by someone else. Is that a problem ? In copyright law yes, but I doubt that microstoshooters will see added revenue with no extra work as something negative.

After all, in this world, the more distribution channels, the better.

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One Thought on “Clouds of Content

  1. Hi

    Thanks for clearing that up – I have always heard people saying Alexa ranking means nothing and now I understand why.

    Nice blog by the way.

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