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11/21/2012 12:47:34 PM · #1 |
Alamy has just announced that it is cutting contributor royalties from 60% to 50%.
Here is the text of the announcement:
Your royalty percentage will be decreasing by 10 percentage points in early
2013 for direct and distributor image sales.
The change applies to all images from all our contributors, regardless of
which commission structure you are on. For example, Alamy Blue contributors
will move from receiving 60% of each sale to receiving 50%. Video royalties
will remain unchanged at 50%.
Why are we doing this? Alamy is a profitable business, however we are at
a stage in our development where we have reached the limits of our expansion
under our current set-up.
Alamy has developed significantly over the past 18 months. We introduced
a News Sport and Entertainment division and we are now selling video. We’ve
started curating the collection for creative picture buyers and continue
to bring innovation and high quality service to the editorial market. We
have ambitious plans to gain market share from our competitors and grow the
business.
We’ve increased our sales staff in our core UK and US offices and also
in key growth markets such as Germany, India and Australia. We’re also
simplifying the buying process for our customers by introducing sales focused
initiatives such as Alamy iQ.
In early 2013 we’ll unveil our new look website. Alamy is transforming
into a Sales and Marketing led business with the ultimate goal of growing
sales.
All of this is designed to drive sales and this will be accompanied by further
initiatives planned for 2013 to improve the contributor experience.
We understand that reducing your share by ten percentage points cannot be
seen as great news in the short term. However, this investment will provide
Alamy with the foundation to greatly improve our presence and penetration
and so increase sales.
When we made a change like this back in 2008 it was to fund expansion into
the US. We’ve been true to our word. Our US office sales performance is
growing at the rate of 30% year on year. The US is now our largest direct
sales operation and we are currently recruiting staff to expand it further.
Our experience shows that investing in the right things does pay off.
All contributors will receive a formal notification via email of the changes
to the contract.
--- END ANNOUNCEMENT ---
It is clear that they intend to "expand" their business on the back of our reduced royalties. |
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11/21/2012 01:30:45 PM · #2 |
Originally posted by Slagathor:
It is clear that they intend to "expand" their business on the back of our reduced royalties. |
So, the question is, will the increased sales more than offset the reduced share? If so, it can be seen as a net benefit for contributors. Still, it means you need to sell more to make the same money, and all in all, I don't think that's a good thing. I also have some doubts about how they will "take market share from competitors" by reducing their attractiveness to potential contributors. |
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11/21/2012 01:48:52 PM · #3 |
In doing the math, we see the "10%" reduction in the royalty rate is actually a 16% reduction in contributor revenue.
While I personally hate price reductions, I can understand how it can increase revenues. I understand economics and seeking for the revenue-optimal point on the demand curve.
However, reducing royalties does not increase sales or revenue. This is a lazy way of increasing profits. If Alamy has been so successful in its marketing efforts, why can't they finance growth from their profits? |
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12/02/2012 08:12:12 PM · #4 |
Originally posted by Slagathor:
...
However, reducing royalties does not increase sales or revenue. This is a lazy way of increasing profits. If Alamy has been so successful in its marketing efforts, why can't they finance growth from their profits? |
This is exactly what worries me. Is Alamy having some problems? Or is it greed? Otherwise I think so too that they should expand by using their profit.
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