Monday, September 29, 2008

Alamy - Oh My!

So, Alamy has reached a critical mass that they've decided they can begin to take advantage of their photographers.

Generally speaking, when a business decides to expand it's operations, they don't call all their suppliers and tell them "well, we're growing our business and opening a new office, so what we paid you before for your hard work we're now paying you less - 5% less to be exact." If you're a business you expand your operations from your cash reserves, not on the backs of your suppliers. It's laughable on it's face that any other business would do this, yet photographers will just shrug their shoulders, and accept the lower revenues.

(Continued after the Jump)

Recognize this - when Getty's Jonathan Klein moved from Seattle to New York, it was primarily to find a suitor. Now, Alamy's CEO is coming to the Big Apple to "oversee the opening of the US office..." which means that he's looking for a buyer. Good luck.

What's next? Well, look at Getty as a roadmap. It's getting harder for photographers to get their material accepted, with very inconsistent rejection reasons. Getty started a "pay for acceptance" per-image charge model. Don't be surprised to see that from Alamy in the near future.

Alamy will continue to do things that make it more attractive to a buyer, and that includes things like further reductions in photographer percentages, and so forth. Instead of shrugging your shoulders, try canceling your contract and pulling your images. It's only a matter of time before they are asking you to bend over.

Please post your comments by clicking the link below. If you've got questions, please pose them in our Photo Business Forum Flickr Group Discussion Threads.

22 comments:

Colby said...

I love how you don't pull the punches. It seems there is alot of political correctness out there but I feel that I get your point of view with rare clarity. Thanks for the good work.
-Colby

lawsonpix said...

Supply and demand. There appears to be a very large supply of photographers... I've moved away from stock as an income source... I'm sure others will do the same.

mposeyphoto said...

I don't like the new compensation model, but I don't believe it's "laughable on its face." It's the same model Wal-Mart has used for years, and it has helped turn them into the biggest company in the world. Calling their suppliers and saying "give us your product for five percent less, or we can't represent you" is exactly what Wal-Mart been doing for years, now. Alamy apparently wants to be the Wal-Mart of images.

Ziv said...

Getty and Alamy are following the Walmart Model of supplier expectations... squeez'em...hard.

Will Seberger said...

You're right on the money as usual, John.

But, while a business should be grown on capital reserve, that's a deprecated model in corporate America; it would seem

As Ziv indicated above, retail centers like WalMart will dictate to their vendors what prices they'll pay for wholesale. The leverage is that if the vendor doesn't meet that price, it loses its place on the shelves at the largest retailer in the country.

It's the same old song and dance with Getty. They're the largest catalog and the largest distributor. As they say in fishing, they "set market."

And other companies outside of the industry grow and expand off their employees all the time.

As a general rule, companies won't improve method or product so long as profits/revenue can be squeezed from other areas first. Path of least resistance and whatnot.

Unhappy shareholders? Don't offer raises (or offer them at less-than-inflation), reduce insurance contributions and open a few more stores (or merge with another firm). You can almost be sure to squeeze more this quarter. And basically at the direct expense of the employee.

It's really a sad state of affairs in the business world.

Anonymous said...

John,

If you can name me an unedited library that will bring me good regular sales volumes (as Alamy do) and which will give me 60% (after the 5% cut) I'll jump right now.

PSC were "for the photographer" and couldn't sell jack. Getty give me 20%. Who else is out there then?

Telling people to "pull all their images" in some sort of moral outburst only works if Alamy is *not working* for you and you have no income to lose. Are we not business people here? Why would I want to cut off a very healthy revenue stream as we head into a recession???

Alamy looks like a good deal from where *my* bank account is standing.

Anonymous said...

I am also with Alamy and wish I could say the same. I make one to two sales per month. Have over a thousand images with them - correctly keyworded with all their new requirements and was even featured on their home page.

Average sale is around $250.00. I have less than two-hundred images with Getty and average 5K a month.

Anonymous said...

anon, you're completely missing the point. John is telling you the nice way that people desperate like you are making themselves and all the rest pay just because they don't have the flexibility to move away when a business goes bad. You are free to stay and I am sure that there will be quite a lot doing the same. And that means less money for all the photogs from stock (heck, this is becoming more and more microstock) and more money for the shareholders.

Another anon.

Tomas Stargardter said...

I am not one to defend Walmart but at least Walmart will assure sales at a volume. Huge volume. That is why they can demand a 5% discount up front fro the supplier. You are not selling 1 widget but half a million widgets.

On the other hand Alamy deamands a discount up front for nothing. They can kiss my rear end.

Jeff Greenberg said...

In an Alamy forum, someone posted a link to your prediction.

Then later in another Alamy forum, someone said your prediction track record is not very good. I don't know -- I didn't research.

Terry Smith Images said...

John, I politely disagree with you. I think this is a great approach and a good business strategy. Atypical yes, but good nonetheless.

Alamy has a very predictable and ever increasing revenue stream. (Their sales and revenue figures are freely available on their website.)

CEO James West's approach ensures a consistent monthly budget within which to build the New York office. It is far better than raising million of dollars like Photoshelter did and then blowing it all in a few months. Competing with Getty in the commercial use market will take YEARS. It takes years because it's a game of major corporations like Alamy making inroads and preferred vendor agreements with large advertising firms and other major corporations. Longevity is key. As James said in their press release, "Around 80 per cent of our revenue comes from high value, high volume large accounts but we are under-exposed in this market in the US." If they can stay within their budget, then I think this will give them the time they need.

If they can just get a foot-hold, then it's self-perpetuating. Increased revenue from U.S. sales means more money they poor back into the market on advertising and free Martini hours for NY ad execs.

If it fails, so what? It would be an embarrassment obviously, but at least they will not be out millions of dollars in debt.

As far as whether this is a move to shop Alamy around NY and look for a buyer, I just don't think so. The market timing would be terrible and with the weak dollar I don't see any U.S. firms running out to buy foreign companies. I'm sure Alamy is quite a cash cow for its owners.

I also suspect James West thrives on a challenge and competing with Getty and Corbis in the U.S. gives him that. If Alamy eventually gains 33% of the U.S. market, then yeah, he might get bored and want to sell it off and do something else.

For now, I support the move, and I'm not pulling my images.

-- Terry

John Harrington said...

Terry -

>>>I'm sure Alamy is quite a cash cow for its owners.

Really? So why does an additional 5% have to come off the backs of the photographers that it makes it's money off of? Why justify a 5% loss of your revenue?

As to my predictions being wrong as suggested on the Alamy forum, check my predictions about Getty stock plummets. I was spot on on that, and also that Klein's move to NYC was to do just that.

Fotografo said...

So what?
I would like a suggestion.
It seems that only DRR is a choiche for us.
Getty no, Alamy no, photoshelter disappeared, DRR change is margin easily...
What we are supposed to do?

Terry Smith Images said...

I think James is making enough of a sacrifice by moving his whole family to another country for 6 months. It would be a nice gesture if he would drop his compensation by 5%, but whatever his compensation package is he obviously stands to make a lot more money if they are successful and that's what counts as far his motivation is concerned.

I view the 5% loss in my revenue as barely noticeable and a good investment that should more than pay for itself. My U.S. sales through Alamy have already increased within the past year from nearly 0% only 2-3 years ago to a substantial percentage this year, one sale just today in fact. All of them this year in the U.S. have been editorial sales though. I am hoping, and this is just pure speculation on my part, that as part of this roll out they will create some scheme for a parred down commercial sub-collection as well. Though so far that has not been an issue with me making commercial sales outside the U.S. through Alamy.

-- Terry

Anonymous said...

John,

I would be interested to know what you assume alamy's operating margin to be at this time. Also, what do you believe alamy's liquid assests (ie cash) to be right now? Do you really think alamy is operating with a high margin and is loaded with capital? If so, you overlook the state of the industry and alamy's position.

IMHO, I think you overestimate alamy's ability to finance a project of this size WITHOUT pulling in external funds. They have chosen to fund this through supplier (photographer) funds rather than external investor funds. We know photographers have an interest in the long-term success of alamy. External investors have an interest in the success of their investment (latest example: Photoshelter Collection). 5% from suppliers (also stakeholders) is a safer move these days.

Anonymous said...

People like Terry have flourished on the net lately. Call it Guerilla Marketing, call it Viral Marketing, call it whatever. Wikipedia, the blogs, the forums, almost everything that is "writable" for the "grand public" has a few personalities like that. And I am starting to doubt they are really that many.

Terry, probably it would be impossible for you to answer, but for you is it a problem of comprehension or a money issue? First you just make a regular sales pitch with the wonders of product X and when this doesn't work you reach for the sentimental value, after all people should cry about the sacrifice of James' family and probably start a charity.

Given your good will, will you endorse my potential to bring photographers world wide a ten fold increase in revenues with an idea I haven't come with yet? I mean, as the poor James, I am working hard and I can give you my word that soon you and all your friends will gain ten times the amount for last year. Please?

Yet, another anon.

Terry Smith Images said...

(John, I am sorry, but I couldn't help but to respond to Mr. Anonymous. This will be my last post on this thread.)

Dear Anonymous,

In likely undeserved response to your dribble:

Paragraph 1, "People like Terry have flourished on the net lately." -- Actually, I have flourished in everything I have ever done in my entire life, and I do mean EVERYTHING. As for the rest of your paragraph, I merely set forth a different viewpoint from John's for consideration. You in turn, are posting anonymous rants about not liking what I had to say. Which "personalities" does the net really need more of?

"Terry, probably it would be impossible for you to answer, but for you is it a problem of comprehension or a money issue?" -- Neither. I fully comprehend the issue and my stance regarding it. Is it a money issue? Yes. This is business. Everything is a money issue. No exceptions.

"people should cry about the sacrifice of James' family and probably start a charity" and "Given your good will, will you endorse my potential to bring photographers world wide a ten fold increase in revenues with an idea I haven't come with yet?" -- I'm not crying about anything. James is a proven commodity with proven business success. You are an anonymous nobody. I invest my time and money with proven winners. If you don't agree why don't you just delete all of your anonymous images off of Alamy?

-- Terry

gio said...

"It's laughable on it's face"? And "expand it's operations"? How do you have the nerve to pontificate when you're clearly struggling so much with basic grammar?

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